Oral Answers to Questions

FOREIGN AND COMMONWEALTH OFFICE

The Secretary of State was asked—

Arms Trade Treaty

Alistair Carmichael: If she will make a statement on progress towards establishing an international arms trade treaty.

Margaret Beckett: The United Kingdom has led international efforts to secure a legally binding treaty to end the irresponsible trade in arms worldwide. On 6 December 2006 we successfully pushed through a resolution establishing a UN process to work towards a treaty, and we will continue to build support for the initiative in UN discussions during 2007 in preparation for the meeting of the group of governmental experts in 2008, which will look at the draft parameters of a treaty.

Alistair Carmichael: Can the Secretary of State tell the House what scale of financial and staffing resources her Department is giving to the arms trade treaty work in the coming financial year, and how that will compare with preceding financial years?

Margaret Beckett: I am afraid that I do not carry the detail of the Department's finances on this issue at my fingertips, but I will certainly write to the hon. Gentleman. A great deal of work is going on. We are preparing a paper, as are other contributors, to take forward the process of negotiation.

Roger Berry: I congratulate my right hon. Friend and her predecessor on the UK Government's leadership on this issue, which has taken place alongside the work of non-governmental organisations such as Amnesty International and Oxfam. Will she give an assurance that the UK's objective is that such a treaty should cover trade in all conventional arms and all dual-use goods and technologies? Will she advise the House on what progress is being made in persuading the US Administration to modify their previous position and become an enthusiastic supporter of this noble effort to secure action against the abuse of human rights through the arms trade?

Margaret Beckett: I thank my hon. Friend for his remarks, and I agree that a great deal of work was done on this matter by my predecessor. As my hon. Friend will know, we are certainly committed to such a treaty covering all conventional arms, and to focusing on some core principles about when trade is unacceptable. I thank him and his colleagues on the relevant Committee for the work that they do on scrutinising the export of arms. I fear that, although we are certainly engaged in discussions and will endeavour to persuade the United States of the merits of this process, it may take some little time. It was the only country to vote against the proposal.

Robert Key: In pursuing that welcome process, will the Secretary of State draw to the attention of the United Nations the unique circumstances that have led almost everybody to support this move? For once, we in this country have both sides of the House, the Christian Churches, the NGOs and the bishops all in agreement. The people of this country, and I believe the vast majority of the population of the world, think that this issue is important. Let us have a swift process please, and let us hope that the Secretary of State will win the day with this argument.

Margaret Beckett: I thank the hon. Gentleman, and I am grateful to him for mentioning the Churches and the NGOs, because I meant to pick up on what my hon. Friend the Member for Kingswood (Roger Berry) said about those. The hon. Gentleman is absolutely right to say that there is even more support for these moves than we might have thought. We got a very good vote—139, I think—in the first committee, and 153 votes for the resolution. That is about three quarters of the membership of the United Nations. It has indeed been a cross-party, cross-faiths supported movement, and we will certainly get on with it as fast as we can.

Denis MacShane: I congratulate my right hon. Friend on her energy on this subject, but is she aware that in Africa one of the biggest suppliers of weapons is the People's Republic of China? Will she invite our embassy there to seek to monitor that, and to put on the public record what we know about that huge new growth industry in a country that is not democratic and not really much interested in solving this problem?

Margaret Beckett: My right hon. Friend is right to say that there is concern. One of the things that remains a source of some concern, and that we will continue to work on, is that although only the United States voted against the proposal, there is less involvement that we would like to see from other major arms exporters—not only China, but Russia, Pakistan, India and some of the Arab countries. It is important that the support that is built in taking forward the treaty should bring in the major arms exporters. One of the things that I hope and believe will help with that is the involvement of the arms industry itself, which understands the dangers of the unregulated trade.

Gerald Howarth: Does the Foreign Secretary not accept that under successive Governments, the United Kingdom has had one of the strictest arms control regimes in the world, and that Britain's defence industries make a huge contribution to the defence not only of this country, but of our allies? Those who are engaged in Britain's defence industry—some 300,000 of our fellow citizens—are engaged in a noble effort, which should be supported by the House.

Margaret Beckett: The hon. Gentleman is right to say that we have had stringent controls on the export of arms—quite rightly—under successive Governments. He is also correct to say that there is a right to self-defence, and that there is a legitimate trade. One of the excellent things about the initiative that we are taking forward is that it focuses, with the support of the existing industry, on the real dangers of unregulated trade.

Lesotho

Albert Owen: If she will make a statement on the political situation in Lesotho.

Kim Howells: His Majesty King Letsie III of Lesotho dissolved Parliament on 24 November for an election to be called within 90 days, in accordance with the constitution. The election will be held on 17 February. Our non-resident high commissioner, Paul Boateng, visited Lesotho on 4 December. High commission staff are monitoring the situation and remain in regular contact with Lesotho Government Ministers and officials, the chairman of the independent electoral commission, political parties and civil society organisations.

Albert Owen: The Minister will be fully aware of the strong links that exist between Welsh communities and the Kingdom of Lesotho, especially in the field of education. He will know that among the problems affecting the country's economic stability are poor health and the exacerbated problem of AIDS. The situation is being made even worse by the exodus of medical practitioners and doctors from the area. What are the UK Government doing to stabilise the situation so that Lesotho can deal with its health problems, tackle its economic problems and bring about political stability?

Kim Howells: The United Kingdom is the only developed country to implement and review systematic policies that explicitly prevent the targeting of developing countries in the international recruitment of health care professionals. The NHS leads the way in the ethical recruitment of health care professionals and has worked with the Department for International Development to draw up a list of countries from which it will not actively recruit, including all countries in sub-Saharan Africa and the Caribbean. The NHS will contract only with private recruitment agencies that are signed up to the code of practice.

James Duddridge: In retrospect, would not the Government have been in a better position if they had not reneged on a commitment to maintain a full-time high commissioner in Maseru?

Kim Howells: No, certainly not. Our high commissioner based in Pretoria visited Lesotho three times in 2006; his most recent visit was in December 2006. That small poor country will be adequately covered by our high commissioner in Pretoria.

Ian Lucas: One of the major challenges facing the new Government in Lesotho will be the delivery of primary education for the first time to the country's young people. Will my hon. Friend commend the work being done to carry through the global schools initiative by Dolen Cymru/Wales link, which is sending school teachers from Wales to Lesotho for long periods to assist in the delivery of education to young people for the first time in a country that has been starved of opportunities in the past?

Kim Howells: I commend the excellent work of Dolen Cymru in Lesotho. My hon. Friend reminds us of the strong links that Wales has with Lesotho and other communities; my town of Pontypridd has strong links with Mbale in Uganda. Such links are based on teachers and doctors working with professionals in those countries so that no money donated is wasted, and it is all used to the best effect.

European Constitution

Ann Winterton: What her policy is on the treaty establishing a constitution for Europe.

Geoff Hoon: At present there is no consensus among EU Governments on the future of the constitutional treaty. The German presidency has been asked by EU leaders to present a report to the European Council in June on possible next steps, following consultation with all EU Governments. I set out the Government's approach in my written ministerial statement of 5 December 2006.

Ann Winterton: Will the Minister give an assurance that no Labour Government would sign a European Union treaty that would give permanent EU competence over United Kingdom affairs by removing the right of Parliament to amend or repeal European Union treaties through the relevant Acts of Parliament?

Geoff Hoon: I am not entirely sure that I follow the reasoning behind that question. What is important is that successive British Governments have supported section 2(1) of the European Communities Act 1972, which was taken through the House by the then Conservative Government. Subsequent Conservative Governments—incidentally, they were supported by the shadow Foreign Secretary—have argued for extending the competence of the European Union, for example at the time of the Maastricht treaty. They have never argued for a referendum on the subject—I have checked—and neither did the shadow Foreign Secretary during all the time that he was in government. The people whom the shadow Foreign Secretary opposed during the Maastricht process are now running Conservative party policy on Europe.

Kelvin Hopkins: The process is apparently being driven by Chancellor Merkel in Germany. Two decisions have been made by democratic vote in France and Holland, rejecting the constitution. When my right hon. Friend next meets Chancellor Merkel, will he remind her about those democratic decisions, and say that we respect democratic decisions even if she does not?

Geoff Hoon: I think that my hon. Friend is being a little harsh on other EU Governments, who of course supported the idea of consultation and encouraged the German presidency. The reason why Chancellor Merkel is so interested in the subject at present is that Germany has the presidency. It is important that all member states find a way forward; there is no agreement at present, as I have said, but that is the purpose of the efforts being made by the German presidency—as, I suspect, efforts will be made by subsequent presidencies.

Andrew MacKay: Will the Minister confirm that it is still Government policy that if there is any new European constitution, it should be put to the British people in a referendum?

Geoff Hoon: It is absolutely clear that there should be a referendum on the European constitutional treaty, and that remains the Government's position.

Gwyneth Dunwoody: May I be helpful to my right hon. Friend— [Interruption.] May I be helpful—as always—and ask him whether, in a constructive mood, we could cease to accept any more transport directives until we have carried out an audit of the effect of European directives on safety for aviation, maritime affairs and, specifically, inland waterways?

Geoff Hoon: I have long learned to appreciate help from my hon. Friend, and it is important that proper audits be carried out before any future directives are accepted on the subjects that she mentions.

Patrick Cormack: In the same constructive spirit, may I too be helpful to the Minister? I suggest that he take Chancellor Merkel to one side for a cup of coffee and tell her that if she is looking for consensus, we have consensus in this country on the subject: we are agin it.

Geoff Hoon: I am grateful for the hon. Gentleman's support. I cannot help but notice that immediately behind him is the hon. Member for Shipley (Philip Davies), who, I understand, has been given permission by the Leader of the Opposition to campaign for the Conservative party to advocate leaving the European Union. There appear to be 57 different policies among Conservative Members, and that of the hon. Member for South Staffordshire (Sir Patrick Cormack) is only one of them.

Keith Vaz: My right hon. Friend will know that the German presidency has suggested a meeting on 25 March in Berlin, at which it hopes to make a Berlin declaration, which will consist of a statement of the fundamental values of the European Union. Will he tell the House that the Government will fully support such discussions, and that where there are matters on which Governments can agree, and that do not require constitutional change, we will move forward in a spirit of co-operation?

Geoff Hoon: My right hon. Friend is right. The 50th anniversary of the signing of the treaty of Rome, which will be marked by a declaration in Berlin next March, is an important anniversary in the history of the European Union. It is right that we should not only celebrate the achievements of the European Union, but look to the future, as regards the principles that guide the decisions that we will take. It is vital that the United Kingdom should participate enthusiastically in that process, as we will, and I am sure that the Leader of the Opposition will join us in that celebration.

Angus Robertson: Does the Minister for Europe remember the serious disquiet in Scotland, Norway and Iceland following the enshrining of fisheries as an exclusive European Union competence in the constitution? Does he not agree that if there is a renewed constitution or similar treaty, it should command the support of nations inside and outwith the European Union, and those who might seek to join at a future date? Bearing that in mind, will the Government give a commitment to revisit the issue, should such negotiations be started?

Geoff Hoon: We are constantly reviewing policies in those areas. No doubt, the hon. Gentleman is thinking about his party's position going into the Scottish elections, as it advocates leaving not only the United Kingdom but the European Union.

Wayne David: Does my right hon. Friend agree that what the European Union requires is not a grand constitution but modest pragmatic change?

Geoff Hoon: My hon. Friend is quite right. What is important as we take the European Union forward—and the British Government have consistently advocated this—is step-by-step developments and benefits for the citizens of Europe. That is the best way of acknowledging the significant changes that Europe has made in the interests and for the benefit of citizens of the UK and elsewhere.

Graham Brady: In reply to my written question, the Prime Minister confirmed yesterday that he responded to the German Chancellor's request by appointing Mr. Kim Darroch and Ms Nicola Brewer to liaise with the German EU presidency on the drafting of the new political declaration and
	"possible ways to take the constitutional process forward."—[ Official Report, 15 January 2007; Vol. 455, c. 788W.]
	What terms of reference have Mr. Darroch and Ms Brewer been given? In particular, will they be told to make it clear to the German presidency that the EU constitution is not acceptable to Britain, and that a referendum would have to be held on any new treaty containing significant elements of the constitution?

Geoff Hoon: Two very distinguished civil servants have been appointed to deal with the questionnaire that the German presidency will circulate to all member states. It is vital that member states find a way forward, and I am sure that the hon. Gentleman will join me in acknowledging that, because it is in the interests of both the European Union and the United Kingdom. We want to ensure that the UK is constructive and positive, and finds a way through the difficulties facing the EU. I have already made clear our position on a referendum in the UK.

Sudan

Lynne Featherstone: What recent assessment she has made of developments in the situation in Darfur; and if she will make a statement.

Helen Jones: What recent discussions she has had on the situation in Darfur; and if she will make a statement.

Margaret Beckett: President Bashir has now accepted UN support for AMIS—the African Union Mission in Sudan—and has allowed the first UN military personnel into Darfur. That is important, but it is only the first step. We urge the Government of Sudan, the UN and the African Union to work for full implementation of the joint support package and an urgent resumption of the political process. All sides need to observe the ceasefire, too, particularly the Government of Sudan, who have been bombing the rebels, as that is vital for progress on the humanitarian front.

Lynne Featherstone: I thank the Secretary of State for her reply, but has a time line been developed for the United Nations and the African Union to be on the ground? At what point will that protection start to be provided for people in Darfur?

Margaret Beckett: There are three stages to the deployment: first, light support, in which 180 personnel, 34 of whom have already arrived, are expected to be involved; secondly, heavy support; and, finally, the establishment of a full hybrid African Union and United Nations force. There is no specific timescale, but everyone who wishes the position in Darfur to improve is anxious that as many of those people as possible should be deployed as soon as possible, and that is something for which we are all working.

Helen Jones: Is it not correct that although it is six months since the Security Council agreed to put more than 20,000 peacekeepers into Darfur, very few countries have agreed to supply either troops or police? What can my right hon. Friend do to convince more of our allies to support UN resolutions on the ground? When that deployment is finally made, will she ensure that steps are taken to protect the women of Darfur, thousands of whom have been raped when they went out to do normal tasks such as gathering firewood?

Margaret Beckett: My hon. Friend is right to draw attention to one of the most appalling aspects of the situation in Darfur. I understand her concern that there has not been a speedier commitment of forces ready to move into Darfur, but she will appreciate that one reason is that until now, the Sudanese Government have been unwilling to make clear their acceptance of the need for troops. It is difficult in those circumstances to persuade the international community to come forward as speedily as it should, but with our allies, we continue to push for such steps.

John Bercow: Given that the poisonous conflict in Darfur has now spread to Chad and the Central African Republic, and that as the right hon. Lady has acknowledged, foot-stamping by the Sudanese Government has already vetoed one vital United Nations troop deployment to Darfur, what further steps can and will be taken by the international community to rein in that violent barbaric regime, whose diplomatic sorcery is exceeded only by its unrelenting genocide?

Margaret Beckett: As the hon. Gentleman will be aware, because I know that he takes a great interest in these issues, we have appointed a special representative to go and work in the area as a roving ambassador, and the United Nations has recently appointed Jan Eliasson, who was, I believe, in Sudan last week, to make his own fresh assessment of the situation. So further diplomatic efforts are continuing. In fairness, I ought also to say that President Bashir wrote a few days ago to say that he does accept the agreements made at Addis Ababa and the previous agreements, and will now proceed to implement them. We all hope that on this occasion that will be followed through.

Gisela Stuart: Further to the answers that my right hon. Friend has given, can she say whether we have had bilateral discussions with the French, in particular, and with the Government of Chad, about how we can support the efforts of the international community more specifically?

Margaret Beckett: We have had continuing discussions with a number of allies, including our French colleagues. As my hon. Friend knows, there is concern about the position in Chad. We are pressing all involved to uphold the Tripoli agreement and to stop the fighting that has been occurring on the border, not least through proxies on the border, and to take more concrete steps on the ground to try to re-establish a degree of peace, not least because, as I know my hon. Friend and the House are aware, the last thing we need in the region is to see instability and conflict spreading in Chad, to add to that in Darfur. I can assure my hon. Friend that we are doing everything we can to make progress on the matter.

William Hague: Does the Foreign Secretary agree that the situation on the ground in Darfur appears to be the worst that it has been for some time, with humanitarian access at its worst point since about 2004, given the withdrawal of NGOs, and with 200 people reported killed in the week up to last Saturday, journalistic access—for obvious reasons—increasingly rare, many thousands of people in danger of violence, and hundreds of thousands in danger of food shortages? Although I welcome, as the right hon. Lady does, the comments of the President of Sudan, will she comment on the fact that he is also reported as saying at the weekend that UN troops are not necessary, and that there are sufficient forces in Sudan already, from African countries—not a helpful approach to the situation? Given her previous statement last October that "negative consequences" will arise for the Government in Khartoum if the situation continues to deteriorate, will she reiterate that today, and even spell out what some of those negative consequences might be?

Margaret Beckett: I am grateful to the right hon. Gentleman for making those points. In some ways he is right about the situation being dreadful and deteriorating, but in some ways it is not quite so bad, in that there is less fighting than there has been. What are particularly dreadful, and must cease, are attacks by the Government themselves, including in the past few weeks attacks on groups who had just agreed a ceasefire with the African Union commanders. That is a chaotic and ridiculous situation. The right hon. Gentleman is right to highlight the implications for the humanitarian effort. I am sorry to tell the House that there are probably fewer aid workers in Darfur now—for wholly understandable reasons; those are very brave people, who go into all sorts of horrendous situations—than for about two years, although there remain quite a number of food stocks. I know that the right hon. Gentleman is aware that we have tried to do everything we can to work with the humanitarian organisations, by helping to organise protected routes and so on. As I mentioned, the UN envoy was in Sudan only a few days ago. The right hon. Gentleman is right to highlight the fact that there is quite a small window of opportunity for the Government of Sudan to show that this time they are sincere in being willing to move forward with the UN and the African Union. If they are not able to do so, consideration of what action the international community can take, such as sanctions, will have to come to the fore again, which is not what anybody wants.

David Drew: My right hon. Friend will be aware of reports that last week some 200 people were killed in clashes between ethnic African farmers and nomadic Arabs in southern Darfur. She will also be aware that the rebel forces have split into many different groups, which seem to spend as much time fighting one another as they do even the Government of Sudan. Would she go as far as to impress on the Government of Sudan the view that this is now not only a question of trying to bring in a force to deal with the normal conflict, but of ensuring that there is security on the ground, so the AU-UN force has to be brought in now, not in the future?

Margaret Beckett: My hon. Friend is right to express concern about the fact that there seem to be even more splits among the rebels, and fighting within and between different rebel groups. That suggests that unless we can soon make more progress in pushing forward the peace agreement and encouraging the rebel groups who had not previously signed to do so, the administrative situation could deteriorate from where it is now. As he says, that makes the situation urgent as well as dangerous, and we will continue to work with our colleagues in the United Nations to try to see what can be done to help to resolve it.

Somalia

Andrew Robathan: If she will make a statement on the situation in Somalia.

Margaret Beckett: After some years of lawlessness and little effective government, an historic opportunity now exists for a sustainable solution to Somalia's difficulties. We are working with Somalia's transitional institutions and our international partners to help to stabilise Somalia through early deployment of a security force, to restore governance through an inclusive political process, and to rebuild Somalia through increased international assistance.

Andrew Robathan: Following directly on from stability and international assistance, what is Her Majesty's Government's position on the recent American air strikes in southern Somalia?

Margaret Beckett: The hon. Gentleman will know that there is concern about some of those who have been active in supporting or pushing terrorist activity in that part of the world. I am afraid that action sometimes has to be taken to stop those activities.

Ann McKechin: Given that many fear that the clan-based warlords will simply reorganise themselves and continue the insecurity that Somalia has faced over the past 16 years, what steps will the international community take to foster reconciliation among the various clans so that we can tackle the long-term reasons behind the insecurity and violence that has blighted that country?

Margaret Beckett: My hon. Friend is right to identify those concerns. As I said to the hon. Member for Blaby (Mr. Robathan), we are encouraging the transitional Government towards an inclusive political process, because we feel that that could help. There is a fairly widespread view in the international community that, paradoxically, recent events in Somalia have created a better opportunity for such moves than has existed there for quite some time. My hon. Friend the Minister for the Middle East has recently been in Yemen and Kenya talking to other people who are taking a great interest in these issues. We are doing what we can to seize the opportunity that recent events have created.

Mr. Speaker: I call Mr. Walker.

Mark Pritchard: Thank you, Mr. Speaker. My hon. Friend the Member for Broxbourne (Mr. Walker) is far better-looking than me—[Hon. Members: "Hear, hear!"] That is what he tells me, but I do not believe him.
	Further to the Foreign Secretary's comments on the security force on the border between Somalia and Kenya, can she give the House an assurance that the quid pro quo for the Ugandan defence force's involvement will not be to turn a blind eye to the creeping move against freedom of speech and freedom of the press in Uganda?

Margaret Beckett: No; absolutely not. We welcome Uganda's willingness to help resolve the situation in Somalia, but Uganda is not the only country in the world about which we continue to have and express concerns regarding some of its domestic policies, while welcoming its involvement in some international efforts.

Jeremy Corbyn: Will the Foreign Secretary reconsider her earlier reply to the hon. Member for Blaby (Mr. Robathan) about the American air strikes in Somalia? Does she not accept that the United States performed a wholly illegal act, which will make the position worse? Several people killed as a result of the air strikes were nothing to do with Islamic Courts but innocent civilians who happened to be in the area. Does not she acknowledge that that makes the situation in Somalia far worse, rather than bringing about the necessary peace and reconciliation process to put an end to the misery that has been the life of most people in Somalia for at least the past three decades?

Margaret Beckett: I certainly accept my hon. Friend's final remarks that a peace and reconciliation process is important for the long term. As I have already said in answer to several other hon. Members, we intend to encourage the transitional Government to undertake a political process that is as inclusive as possible. However, I stress to my hon. Friend that it has long been public knowledge that extremist elements have operated as part of Islamic Courts and that al-Qaeda has operated in Somalia for some time. That poses a threat to people in Somalia as well as the wider international community. I take the view, which the Prime Minister expressed last week, that there cannot be a safe haven for international terrorists.

Geoffrey Clifton-Brown: Does the Foreign Secretary agree that there is a short window of opportunity in which to establish a self-governing, stable democratic state in Somalia, which is a hugely important strategic area of the horn of Africa? She referred to the international stabilisation force that may be established today. What dialogue has she held on the matter with the international community? Does she agree that the force must have sufficient combat strength and an adequate mandate, and that there is a genuine danger of Somalia descending into a fundamentalist Islamic state if sufficient action is not taken in good time?

Margaret Beckett: I agree with the hon. Gentleman's opening remarks. Yes, of course there is a danger, but it has existed for quite some time. One reason for sharing his wish for speedy action to move in and support the Government in Somalia is that it is perhaps less of a risk now than it has been for a considerable time. We are very anxious to secure a force that has sufficient strength and the right kind of mandate. On dialogue with the international community, as it happens I was discussing the matter only this morning with the President of Tanzania. Our officials were heavily engaged in the international contact group and played a key role in trying to help broker and reach agreement. I therefore assure the hon. Gentleman that we are conscious of the need for speed as well as effectiveness, and we will do everything that we can. No one wants a security vacuum in Somalia, not least because of the dangers to which he and I referred of extremist elements there.

Democratic Republic of Congo

Mary Creagh: What her assessment is of the prospects for reforming natural resource extraction in Democratic Republic of the Congo.

Geoff Hoon: Unfortunately, exploitation of natural resources in the Democratic Republic of the Congo has been a driver of conflict when it could and should be a driver for development. Any sustainable solution will involve tackling corruption and ensuring responsible investment, effective and fair taxation and better control over borders and the resources themselves.
	Stability and prosperity in the DRC will have a huge impact on not only its 60 million inhabitants but the peace and security of the whole central African region. That is why we supported the election process to the tune of £35 million and why we have increased our bilateral support to £62 million this financial year.

Mary Creagh: I thank the Minister for that reply. Before its eight-year civil war, Congo was among the world's top producers of copper, cobalt and industrial diamonds—vast mineral wealth that should now be put to the service of the people of Congo, most of whom live on less than a dollar a day. Will my right hon. Friend work with his counterparts in the European Union to put pressure on the Kabila Government to reform the mining and logging sectors in Congo to ensure transparency in them?

Geoff Hoon: My hon. Friend makes a number of important points. It is important that the DRC has already signed up to the extractive industries transparency initiative and the Kimberley process. We will continue to support the implementation of both those policies, as we will support the Congolese national committee charged with taking forward the implementation of the EITI. We are also seeking to help to promote responsible business behaviour in the private sector, and to improve the livelihoods of the many Congolese small-scale miners engaged in the extractive industries. As far as forestry issues are concerned, we are financing a study and a series of round-table discussions with non-governmental organisations and industry to develop new and innovative models for sustainable forest use in the DRC. We will also contribute to a multi-donor trust fund which provides support for improving governance in the DRC forestry sector.

Nicholas Winterton: Is the Minister concerned about the growing influence of the People's Republic of China in African countries, not least the Democratic Republic of the Congo? The natural resources with which countries such as the DRC are richly endowed are of growing interest to the communist Chinese. Does he feel that that will be helpful to the development of such countries?

Geoff Hoon: The People's Republic of China is responsible for a huge amount of the world's manufacturing industry these days and has legitimate reasons for engaging in trade in Africa and other continents. Concern has been expressed, however, about the extent of the influence that follows on from that legitimate trade, and we keep that matter under constant and close review.

Judy Mallaber: Reforming natural resource extraction and other reconstruction measures in the DRC will require good governance and parliamentary scrutiny. Given our Government's strong support for the recent democratic process, which the Congolese acknowledged to us when we were there and since then, will my right hon. Friend commit the Government to continuing involvement with the democratic process in the DRC, including giving strong support to strengthening the civil institutions and to making it clear that an effective parliamentary scrutiny role must be given to the opposition, who should not be excluded from parliamentary positions or commission chairs? Otherwise, we might find the country slipping back into conflict.

Geoff Hoon: I am grateful to my hon. Friend for her question. The figures that I gave to the House earlier show that the United Kingdom was the largest single donor in assisting in the monitoring process, and I am grateful for her participation in that process. The United Kingdom was also the largest European supporter of the DRC in the last financial year. It is clear from the constitution that there is no specific role for the opposition in the DRC, but following the election, President Kabila said that he would be willing to provide an opportunity for such a role to be developed. The United Kingdom Government will offer expertise and assistance on the role of the opposition, and the Opposition in the United Kingdom, having long experience of that role, might wish to assist us in that.

Malcolm Bruce: I welcome the Minister's acknowledgement that the DRC has signed the EITI and the Kimberley process. Signing is one thing, however; enforcing is something different. Will he give me an assurance that this Government and the European Union will ensure not only that those initiatives are extended, secured and supported but that any accusations of malpractice or trading in conflict resources by EU or British companies are thoroughly investigated and exposed, so that there can be no opportunity for the country to break down into conflict again or for the warlords to get revenue from conflict resources?

Geoff Hoon: The right hon. Gentleman makes a good point. I alluded to the matter earlier. The DRC has signed up to those initiatives, and it is important that they are now delivered. The United Kingdom Government are engaged in supporting a committee that has been established in the DRC and charged with the responsibility for delivering those initiatives. We need to ensure that we can offer the necessary expertise and support to the Government there to ensure that those policies are carried through.

Syria

Jane Kennedy: What recent contact there has been between the Government and the Government of Syria; and if she will make a statement.

Kim Howells: The British embassy in Damascus maintains regular contact with the Government of Syria. Our ambassador met President Assad of Syria and Foreign Minister Muallim on 7 January. The Prime Minister's foreign policy adviser, Sir Nigel Sheinwald, visited Syria in late October 2006. He reiterated the Government's hope that Syria will revise its policies to play the constructive role in the region that the international community expects.

Jane Kennedy: I am grateful for that statement, but would not my hon. Friend be well advised to be cautious in approaching Syria, given the real concerns about its border to the east with Iraq, which insurgents and weapons are believed to cross, and suspicions surrounding its involvement to the west in Lebanon, where political assassinations are believed to be attributable to the Syrian Government? One can, however, imagine Syria playing a constructive role which would bring enormous relief to the region—for example, by offering a less warm haven to the political leadership of Islamic Jihad and Hamas in Damascus.

Kim Howells: I read with great interest a publication to which my right hon. Friend put her name recently, in which she reminded us that former Israeli Prime Minister Ehud Barak once said:
	"Our dispute with Syria is simpler to sort out than the Palestinian"
	because
	"on the Golan Heights there is no Temple Mount."
	That is an interesting observation. My right hon. Friend is right: there is no question but that putting life back into those agreements between Syria and Israel would have a galvanising effect on the peace process in the middle east. She is also right to highlight the enormous difficulties that have arisen as a consequence of Syrian foreign policy in recent years. There is, however, potential for change. I very much hope that the friendlier noises that we have heard recently as a consequence of such initiatives will increase, and that Syria can become part of a constructive move to peace in the middle east.

Nicholas Soames: In welcoming the visit of Sir Nigel Sheinwald to Damascus, may I ask the Minister what has flowed from it? Given the importance that the right hon. Member for Liverpool, Wavertree (Jane Kennedy) rightly attaches to Syria and its dealings, does the Minister agree that we should do more to engage the Russians' interest in encouraging the Syrians to play a more responsible role?

Kim Howells: I agree entirely with the hon. Gentleman's observations and approach to the issue. We are pressing the Russian Government to play a more constructive role in relation to Syria. We are encouraging them to urge the Syrians to look to their eastern border with Iraq, to reconsider their relationship with Hezbollah and, probably most importantly in view of what he said, to reconsider their support of the rejectionists in Damascus, in order to improve the situation in Palestine.

Don Touhig: On Christmas day, the 72-year-old uncle of my constituents, Talib and Dianne Elam, was shot and died when American troops attacked his house in Baghdad. The family are Kurdish, suffered terribly under Saddam, and strongly support our intervention in Iraq and the new Iraqi Government. They are now desperate to find out the circumstances surrounding their uncle's death. Will my hon. Friend raise the issue with our American allies and ask them to provide the family with as much information as possible?

Mr. Speaker: Order. I am very troubled by the story that the right hon. Gentleman tells. Unless the death took place in Syria, however, it is not relevant to this question.

Malcolm Rifkind: As Iraqi Ministers have said publicly that they are satisfied that the vast majority of foreign jihadi terrorists enter Iraq through Syria, and as it is inconceivable that that can happen without the knowledge and acquiescence of the Syrian Government, will the Government not just respond to friendlier noises from Damascus but emphasise that no meaningful relationship can be achieved with that country unless it ceases such support?

Kim Howells: We have made those points forcefully to President Assad on several occasions and will continue to do so; the right hon. and learned Gentleman is right. He might also have said that there have been indications that some of the jihadists who are moving into Iraq do not much like the regime in Syria either, and might just decide to stay there. The Syrian secret service is more than a little worried about that.

Tony Lloyd: In a similar vein, do the British Government remind the Syrians that the instability in Iraq is likely to lead to the break-up of Iraq? Given the large Kurdish minority in Syria, it too could experience pressure for secession. On a more positive note, my hon. Friend made the important point that Syria can have a galvanising effect in the region if it comes on board on the right side. We might want it to have a galvanising effect on Hezbollah: to bring it out of violence and into the political process.

Kim Howells: My hon. Friend is right. We are very worried about Syria's continuing support for Hezbollah. We know from intelligence that we have received from various sources that weapons are still moving across the Syrian-Lebanese border and down to Hezbollah. That is deplorable, and of course runs counter to the United Nations Security Council resolutions that forbid it.

David Heath: The United Nations' estimate of 35,000 civilians killed last year will, I think, dispel any lingering doubt that Iraq is in a state of civil war, and the resolution of that will desperately need Syria's involvement. How can we reconcile the United Kingdom Government's efforts in support of the recommendations of the Iraq Study Group, which favour engagement with Syria, with the White House's rejection of that policy and engagement with a strategy involving, apparently, "seek and destroy" and hot pursuit across Syria's borders?

Kim Howells: I was encouraged to hear Condoleezza Rice say that she was prepared to go anywhere to pursue peace in the middle east, although I am not sure that she was specific about Syria. The hon. Gentleman must remember, however, that the House and the Government are responsible for British foreign policy, not American foreign policy. We will continue to do what we think is in the best interests of the British people.

John Grogan: Given that last weekend the President of Iraq went to Damascus to discuss with the President of Syria the sealing of the borders and exchange of security and intelligence information, is there not a strong case—in line with the Baker recommendations, and in the interests of our soldiers serving in Iraq—for discussions at ministerial level between the British Government and the Government of Syria?

Kim Howells: We have regularly made clear—through the Prime Minister's foreign affairs adviser and others, including our ambassador—that we deplore the fact that on occasion jihadists have been allowed to move through Syria and into Iraq to threaten our soldiers. We heard earlier from my right hon. Friend the Member for Liverpool, Wavertree (Jane Kennedy) what happens when certain elements disrupt society in Iraq and allow an anarchic situation in which people are killed at very high rates and very regularly. We have made very clear to the Syrians that we expect them to guard their frontier properly, and to ensure that jihadists do not move through Syria into Iraq to threaten our troops.

Keith Simpson: The Minister said a few moments ago that it was the role of the House and, indeed, Ministers to speak on behalf of British foreign policy. May I return him to what many people think is a distinct lack of coherence between the approaches of our Government and the American Government to involving Syria in the situation in Iraq? The Prime Minister spoke forcefully in support of the Iraq Study Group's proposal that Syria should be engaged, and the Foreign Secretary herself said that she too supported it. Obviously Sir Nigel Sheinwald had been there. Yet, to all intents and purposes, President Bush has rejected the idea. What influence have the Government on the United States Government when it comes to engaging Syria fully in the process?

Kim Howells: I would argue that we have as much influence as any country—outside the United States—on the face of the earth, and we will continue to argue the case in which we believe. That includes trying to engage with the Syrians and anyone else who is likely to make the situation better, not just in Iraq but in the middle east in general.
	I remind the hon. Gentleman that there have been some very welcome moves recently. The Syrians are setting up an embassy in Baghdad, and the Iraqis have a reciprocal arrangement in Damascus. It is very good news that the two countries are establishing stronger diplomatic links: that must be seen as a positive development.
	The hon. Gentleman is right to say that we must keep stating what we believe in, and we will continue to talk to whoever we think will make the position better than it is at present.

Joan Ruddock: What assessment has my hon. Friend made of the recent statements of Khaled Meshal, who is thought to direct Hamas policy in Palestine from his base in Damascus? He recently said that Israel is a "reality" and that
	"there will remain a state called Israel, this is a matter of fact".
	Does my hon. Friend think that that statement is sufficient to begin at least some third-party connections with Hamas, which is, after all, the elected Government of Palestine? Does he understand that many of us believe that we cannot talk only to Fatah in Palestine, but that there must somehow be a means of communicating with Hamas as well?

Kim Howells: A debate is going on within Hamas about its attitude towards Israel. At the conclusion of that debate we should know whether it has moved in a direction that enables us to have a constructive conversation with it, but we cannot have a conversation with a political party—or a Government at present—that pays suicide bombers to kill innocent Israelis, any more than we could have one with any other despotic regime anywhere in the world. I recognise the validity of the proper democratic process by which Hamas was elected, but the British Government should not give money to a Government anywhere in the world that has such aims and carries out such terrorism. If Hamas shows signs of moving towards recognition of Israel, we will have to look seriously at that development, but until that happens we must dine with Hamas with a very long spoon.

Middle East Peace Process

James Clappison: What assessment she has made of recent developments in the middle east peace process.

Margaret Beckett: We were pleased that there was a meeting between Prime Minister Olmert and President Abbas on 23 December, which signalled their mutual determination to find a way forward and produced concrete agreements to release $100 million in Palestinian tax revenues and to ease restrictions on movement and access, but it is clear that major challenges remain. We are working with the United States and the European Union on how we can build on that opportunity.

James Clappison: I join the Foreign Secretary in welcoming the moves to peace made by both Prime Minister Olmert and President Abbas, but is not one of the major challenges that remain—to use her words—the fact that Islamic Jihad has chosen to ignore the ceasefire of 26 November, since when it has fired approximately 60 missiles on civilian targets inside Israel? Israel has shown commendable restraint. Will our Government do what they can to bring to an end such rejectionist activities, and in particular put whatever pressure they can on the states that support Islamic Jihad, including Iran?

Margaret Beckett: The hon. Gentleman is entirely right. We regret and deplore the attacks that continue, and continue to congratulate the Israeli Government and to encourage them to maintain their policy of restraint. It is of course a difficult and delicate time when such attacks are going on. It is yet another example of how many people do not wish a peace process to succeed in Israel and Palestine. I assure the hon. Gentleman that our Government will do everything that we can to support and encourage such moves to peace, including putting pressure on those who, as he rightly says, support such armed activities.

Louise Ellman: Is my right hon. Friend aware of reports that Hezbollah in Lebanon is rearming despite the presence of United Nations troops? What representations have been made on that?

Margaret Beckett: Yes I am aware of those rumours. We continue to keep pressure on all involved to restrict such moves and to point out, as my hon. Friend the Minister for the Middle East did a few moments ago, that that is completely contrary to the United Nations resolution and that it will do nothing to help establish peace in the region.

Michael Ancram: The Minister for the Middle East has already acknowledged that one of the main keys to a settlement in the middle east is Syria. Is the Foreign Secretary aware of the fact that, as I learned on a recent visit to Damascus, a large number of senior Ministers in that Administration actively and genuinely support the Baker-Hamilton plan, and will she not emulate her German counterpart by going to Damascus to engage with those people to find a constructive way to reopen negotiations and dialogue with Israel?

Margaret Beckett: As my hon. Friend the Minister for the Middle East said a moment ago, we keep such issues under review. It was a deliberate decision on our part to send Sir Nigel Sheinwald, and it was also a deliberate decision not to go at ministerial level at that time. We keep the matter under review and will continue to do so.

David Winnick: Hearts and minds are as relevant in the middle east as elsewhere. Does my right hon. Friend accept that the gruesome and botched executions that occurred in Iraq yesterday will be strongly condemned in the region, as I hope they will be in this House and in the country at large? Do the Iraqi authorities not understand by now the effect of such action on people generally in the middle east?

Margaret Beckett: My hon. Friend will know that the British Government strongly oppose the death penalty and continue to make representations where we see that it is being carried out. The events to which he referred only highlight one of the many reasons that I think lay behind the wise decision of this House to abolish capital punishment in this country.

William Hague: Will the Foreign Secretary report briefly on the Prime Minister's visit to the middle east before Christmas, and in particular on whether his visit to the United Arab Emirates was the beginning of the strategy that the Opposition have called for to elevate our cultural, political and economic ties with the countries of the Gulf? Is there not a very strong case for such a strategy, and is it not vital if we are to build stronger British influence in the middle east than we appear to have today?

Margaret Beckett: We do continue to have strong influence in the middle east, but the right hon. Gentleman is right to say that it is important to maintain, improve and step up our contact with the Gulf states, as my hon. Friend the Minister for the Middle East has assiduously been doing in recent months. Yes, it was a deliberate decision by the Prime Minister to undertake such steps. On the general issue of the principal outcome of the Prime Minister's visit to Israel and Palestine, apart from confirming our support for and engagement in moves toward a peace process, the main thing that I would identify is the clear need, which was itself identified, to support and build capacity among President Abbas and his office and those who surround him and to seek to work with him. Steps to do so are under way.

Peter Tapsell: What is the point of our Prime Minister continuing to pose as a peace envoy in the middle east? It is like asking King Herod to take charge of the Child Support Agency.

Margaret Beckett: Fortunately, the Governments of the middle east do not share the hon. Gentleman's warped view of the matter.

BILL PRESENTED

Age-related Macular Degeneration

Mrs. Linda Riordan, supported by John McDonnell, Jeremy Corbyn, Ms Katy Clark, Mrs. Ann Cryer and Dr. Gavin Strang, presented a Bill to make provision for the treatment of age-related macular degeneration; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 9 March, and to be printed [Bill 45].

Bilingual Juries (Wales)

Hywel Williams: I beg to move,
	That leave be given to bring in a Bill to amend section 10 of the Juries Act 1974 to provide that in certain cases all members of a jury be bilingual in Welsh and English; and for connected purposes.
	The Bill's purpose is clear: to ensure that in respect of some Welsh cases, the jury is bilingual and able to understand the evidence directly, in Welsh or in English, rather than through a translator. To reassure some Members, I emphasise at the start that this provision would apply only to some cases, and not to all cases heard in Wales.
	I do not intend to argue today in favour of the principle of hearing evidence in the original language. That principle, I would contend, is already explicit in section 10 of the Juries Act 1974, which includes a requirement that jurors understand English and makes provision for their discharge if they do not. The question therefore is not whether we have a language condition for juries, but whether it is to remain an English-only condition or to be an English and Welsh condition in Wales. The answer is that it is important that both the content and quality of evidence be apprehended as clearly and fully as possible by juries. In cases where Welsh is used, juries should be able to understand Welsh, as well as English.
	Much has changed since the 1974 Act. With respect to the demography of the language, there are now more Welsh speakers, and there are more younger speakers than older speakers. The language is getting younger. Many Welsh speakers live outside the traditional heartland areas of the north and the west. Indeed, according to the 2001 census, 40 per cent. of Welsh speakers live in the south and the east, in Cardiff, Newport and the valleys, and in Wrecsam. That has profound significance both for the demand for the use of Welsh in the courts and for the ease with which random selection of bilingual juries outside the heartland areas might be achieved.
	Since the 1974 Act, the law on the Welsh language has changed. Historically Welsh was used in the courts both before and after the Acts of Union with the infamous clauses essentially banning the use of Welsh in the official domain. Given that most Welsh people up to the middle of the 19th century spoke only Welsh—they did not speak English—the use of Welsh in the courts was inevitable. Indeed, it was essential for the administration of justice. However, the clauses in the Acts of Union were in force until the position was clarified by the Welsh Courts Act 1942, which provided that Welsh might be used in some circumstances. That position was modified by the Welsh Language Act 1967 introduced by the then Labour Government, which established the principle of equal validity, which means that if something is done in Welsh it is as valid as if it were done in English. However, it also provided that when there was a discrepancy between a Welsh and English text, the English text would prevail. As was noted at the time, if it was said in Welsh that two and two was four and in English that it was five, it would be five. The situation was addressed again by the Welsh Language Act 1993, brought in by the then Conservative Government. The principle of that Act was that Welsh and English were to be treated on the basis of equality where that was reasonably practical and appropriate in the circumstances. And that is the current state of play in respect of the Welsh and English languages. In general and in the courts, Welsh and English are to be treated on the basis of equality.
	In respect of Welsh cases, a wide variety of cases, up to and including cases of murder, are heard in Welsh. Sometimes each member of the jury is wholly bilingual, sometimes not, and simultaneous translation is widely used. But even though the standard of English-Welsh simultaneous translation is high, I contend that hearing evidence in translation is not the same as hearing and understanding that evidence, with all its nuances, in the original language. After all, juries are often told to judge a witness not just by what they say, but by how they say it. Much is communicated by other means than directly through language. Needless to say, were this Bill to be enacted, simultaneous translation would still be available for others attending the courts.
	The point is that at present there is no guarantee that each member of the jury is able to understand Welsh—only that they understand English. That is simply not just. Welsh and English are not treated on the basis of equality, even though it would be reasonably practical and appropriate in the circumstances for them to be so treated—as the 1993 Act provides.
	In Sir Robin Auld's review of the criminal courts of England and Wales in October 2001, there was a suggestion that bilingual juries should be given further consideration in the interests of ensuring that each defendant has a fair trial. The result was the consultation paper of December 2005 produced by the Office for Criminal Justice Reform. This posed five questions in respect of bilingual juries, which were: would they be justified in principle; could they be reconciled with random selection; how would the power to order a bilingual jury be exercised; what were the wider implications for Crown Court trials in Wales; and what were the preferred options for the summoning of juries?
	I do not have time today even to begin to discuss those matters, but I have seen some of the responses to the consultation paper. I want to refer to the opinions of the legal profession, as expressed by the Standing Committee for Legal Wales, which includes the presiding judge for Wales and many other individuals and institutions. I have also seen the responses provided by my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) and by Mr. Gwynedd Parry of Gray's Inn and the university of Swansea.
	Those responses provide a comprehensive and compelling set of answers in favour of bilingual juries. However, the problem that we face stems from the Government's lack of response to the consultation, and their inaction. The action that the Government should take is clear, and I humbly suggest that my Bill would offer a way to ensure that the Juries Act 1974 was properly amended. I trust that the Government will take heed.
	In conclusion, I want to refer to the well known story of Dic Penderyn, hanged for his part in the Merthyr uprising. Dic Penderyn, of course, is emblematic to many Welsh people of all that was wrong with our systems of government and justice. On the scaffold, Dic is reputed to have said, "O Lord this is an injustice." What he actually said was, "O Arglwydd dyma gamwedd." Penderyn was tried in English but was sent to his death speaking Welsh.
	Today, it would not be right for a defendant to face a life sentence unsure that the members of a jury had understood his evidence as perfectly as they might. Neither would it be right, in the case of an acquittal, for the family of a victim not to be wholly confident that the quality of the evidence against the defendant was apprehended in full by the jury. On both those counts, the case for bilingual juries is overriding. My Bill would ensure that neither of those two eventualities need prevail, and I commend it to the House.
	 Question put and agreed to.
	Bill ordered to be brought in by Hywel Williams, Dr. Hywel Francis, Mr. Elfyn Llwyd, Mr. Dai Davis, Mr. Roger Williams, Michael Fabricant, Mr. Angus MacNeil, Andrew George, Nia Griffith, Adam Price and Mr. Dan Rogerson.

Bilingual Juries (Wales)

Hywel Williams accordingly presented a Bill to amend section 10 of the Juries Act 1974 to provide that in certain cases all members of a jury be bilingual in Welsh and English; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 2 March, and to be printed [Bill 46].

Orders of the Day

Pensions Bill

[Relevant documents: The Fourth Report of the Work and Pensions Committee, Session 2005-06, on Pension Reform, HC 1068-I, and the Government's response thereto, Cm 6956.]
	 Order for Second Reading read.

John Hutton: I beg to move, That the Bill be now read a Second time.
	This Bill takes forward the key recommendations for pensions reform made by the Turner commission in 2005. These reforms will help to lay the foundations for a sustainable and affordable pensions system marked by significantly less means testing and greater personal responsibility for ensuring financial security in retirement. They will also provide a fairer deal for women and carers.
	The Bill makes important changes in five key areas. First, it will establish a simpler and more generous state pension that will provide a solid platform on which people can save, while continuing to target resources on those most in need. Secondly, there will be new rules on eligibility for the basic and second state pension which, for the first time, will properly recognise the social contributions that people make. In doing so, it will deliver fairer outcomes for many women and those with caring responsibilities.
	Thirdly, the Bill will pave the way for a new system of personal accounts that will make it easier for more people to save for their retirement, thus sharing the responsibility for pension saving more clearly between individuals and Government.
	Fourthly, the Bill will facilitate a streamlined regulatory environment that will strengthen existing pension provision, reduce the burden of regulation and help employers who already provide good workplace schemes. Finally, it confirms a higher state pension age for the future, which will keep the proportion of life spent receiving the state pension broadly stable for each generation, and help to secure the long-term financial stability and sustainability of the state pension system.
	The Bill represents probably the biggest change to our pension system since Clement Attlee's post-war Labour Government implemented the Beveridge reforms. Thanks to the work of the Pensions Commission and to the national pensions debate, I hope and trust that these reforms will enjoy widespread support both in the House and outside. Those of us in the House today, when, as I hope, we support the Bill later tonight, have the opportunity to cement that consensus and, for the first time, to offer all our constituents a framework of long-term stability on which they can plan for their retirement with confidence.
	The Bill comes after 10 years of progress, since the Government came to office, in reducing the poverty that had all too often become associated with old age.

John Redwood: Can the Secretary of State tell us what the increased cost will be in the first full year of implementation? Does the big increase mean that the Chancellor is blocking early implementation of the measure and delaying it until well after the next election?

John Hutton: The figures have all been set out, but in relation to the right hon. Gentleman's point, the Government are presenting the legislation and the Government are behind the reforms. He might like to look at the last page of the Bill to see which Ministers support it.

Angela Smith: We are all aware that it was the Conservative Government who broke the earnings link in the first place, and that in statements in the past the Opposition have made it clear that they are proud of that fact. Can my right hon. Friend inform the House about the work he has done to forge a new consensus on this significant issue?

John Hutton: It is important that there should be consensus, if possible, about long-term reform of our pension system. That is precisely why my right hon. Friend the Prime Minister established the Pensions Commission in 2002. It has done sterling work in helping to forge agreement across the parties about the future of our pension system, which is a good thing. My hon. Friend draws attention to the actions of the Conservative Government in relation to pensions, and I want to say one or two words about that in a second.

Philip Hammond: So do I.

John Hutton: We all look forward to the hon. Gentleman's rewriting of the history of that issue. I know that he was a supporter of breaking the link to earnings, so perhaps he will provide his justification for that later. It certainly had the effect of reducing public spending—obviously so—but it created the legacy of pensioner poverty that we had to address when we came to office, and in relation to which we have made significant progress.
	In 1997, one in four pensioners faced the indignity of living below the poverty line. Many had to live on as little as £69 a week. Change to put that right was our first priority, and rightly so. Since 1997, 1 million pensioners have escaped from relative poverty, and more than 2 million from absolute poverty. We are spending £10.5 billion a year more—nearly 1 per cent. of gross domestic product—on pensioners than we would have done had we continued the policies that we inherited in 1997. We have increased the basic state pension by significantly more than inflation, equivalent to more than £350 a year extra for a single pensioner. The poorest third of pensioner households will, on average, be £2,000 a year better off in 2006-07 than under the system of 10 years ago. As a result of all those measures, pensioners are, for the first time in a generation, less likely to be poor than any other group in society.
	Our second priority was to improve confidence in the private pensions market, which is why we acted to clear up the pensions mis-selling scandal and why the Pensions Act 2004 created the new pensions regulator, the Pension Protection Fund and the financial assistance scheme. However, despite those important changes, real and obvious challenges remain for the long-term future of our pension system. That is why, as I have already said, my right hon. Friend the Prime Minister established the Pensions Commission in 2004 to assess what further reforms might be necessary to meet them.
	The commission identified four major issues. First, people were not saving enough for their retirement. Secondly, by 2050, there will be 50 per cent. more pensioners than today, while the ratio of those in work to those in retirement will have halved. Thirdly, as a result of a historical legacy, the current state pension system is, as we all know, complex and delivers unfair outcomes, especially for many women and carers. Finally, if we maintain current indexation policies, the basic state pension will be worth only £35 in today's earnings terms by 2050 and more than 70 per cent. of pensioner households could be eligible for pension credit.

Lynne Jones: The Secretary of State is right to say that many pensioners are, thanks to the Labour Government, much better off today, but the Pensions Commission recommended the restoration of the earnings link by 2010 or 2011, and Government proposals do not introduce that measure until 2012 at the earliest. Is not my right hon. Friend concerned that that is too late to improve incentives and it may also mean that the value of the state pension could continue to decline—in the view of Age Concern, to the equivalent of only £75 a week?

John Hutton: My hon. Friend is right, but she will also be aware that Lord Turner and the pension commissioners have welcomed the Government's proposals for taking the commission's conclusions forward. We have always made the point—and this is particularly incumbent on those who hold ministerial office—that it is important to make it clear to our electorate that we will carry out the reforms when we believe them to be affordable. That is rightly a judgment for the Government and Ministers to make. It should be challengeable, as it is in the House and elsewhere, but we believe that we are taking a prudent and sensible course of action. I do not believe that restoring the earnings link in 2012 will materially affect any of the calculations or assumptions that underpin the Turner report, particularly in respect of those who are most likely to benefit from the reforms.

Michael Weir: Although the restoration of the link is welcome, how does the Secretary of State respond to the National Pensioners Convention, which argues that the link is not being restored to its previous level? Previously, the Secretary of State had the option of making a link to either earnings or prices—whichever were more beneficial—but the pension is being linked now only to earnings. Why not return to the previous position?

John Hutton: There is some flexibility in the Bill with respect to the issue of prices or earnings, which I believe is right. I am surprised that the hon. Member for Angus (Mr. Weir) has found the time to join us today, as I thought that he was busy celebrating the 300th anniversary of the Union— [Interruption.] I am sure that many of his constituents are.
	I believe that the Bill addresses all those crucial challenges head on. Crucially, it does so in a way that promotes personal responsibility for dignity and security in old age with outcomes that are fair, simple, affordable and, above all, sustainable. Part 1 provides for a simpler and more generous state pension, a simplified state second pension, new rules on eligibility that will give women and carers a much fairer deal, and a higher state pension age.

John Redwood: I am very grateful to the Secretary of State for giving way again. Will he tell us why restoring the earnings link is affordable after 2012, but not affordable today?

John Hutton: Because it is linked with our policy for increasing the state pension age. I have to say that I am not going to give way to the right hon. Gentleman again in this debate— [Interruption.] No, the questions are certainly not too difficult. In fact, I am now tempted to give way again, but I know that the right hon. Gentleman will make his own speech in his own way later, as he always does, but I understand that he is one of the few Conservative Members opposed to the principle of automatic enrolment and mandatory employer contributions. I suspect that we will see the right hon. Gentleman take issue with his own Front-Bench spokesmen later in the debate.

David Laws: The Secretary of State has indicated that the delay in making the earnings link is because of the link with the higher state pension age. Does he agree, therefore, that if the Government decide to delay the improvement of the earnings link until beyond 2012, there should logically be a delay in introducing the higher state pension age?

John Hutton: No, I do not accept that. I will come to those points later, because the issue of the state pension age is important.
	As proposed in the pensions reform White Paper last May, the first three clauses reduce the number of years needed to qualify for the basic state pension to 30 and also replace home responsibilities protection with a new deal of weekly credits for carers. For the first time, a life of social contributions will be properly recognised and rewarded on an equal footing with work.

Kali Mountford: The measures that my right hon. Friend is announcing are important, but will he also look at the position of people who work in a number of part-time jobs and do not pay national insurance? If they worked in those jobs cumulatively, they would pay national insurance. They might miss out on a state pension in later life. Will he look again at whether something can be done for people in that position to enable them to pay national insurance or to deem national insurance to have been paid?

John Hutton: We have been looking closely at that issue. My hon. Friend has raised it with me on a number of occasions. It certainly came up during the work of the Turner commission. I have to say honestly that what she proposes would be extremely difficult from an administrative point of view. However, we are more than happy to continue to look at the issue. She might want to discuss that with me. I suspect that my hon. Friend the Minister for Pensions Reform will deal with that issue in Committee.

John Butterfill: rose—

John Hutton: If the hon. Gentleman will just give me one moment, I am trying to make an announcement, but I do not seem to be getting very far. Some people who have paid voluntary national insurance contributions since the publication of the White Paper last May might have chosen not to do so if they had been aware of the proposed changes on eligibility entitlements. That applies most obviously to someone due to reach state pension age after April 2010 who already has 30 qualifying years. I can announce that the Government will make arrangements whereby individuals in that position will be eligible for a national insurance refund.

John Butterfill: A lot of the welcome changes that the Secretary of State has just been talking about represent a great improvement in the condition of women and will benefit women. However, there is one area where women are disbenefited: in relation to the Pension Protection Fund. As I understand it, on divorce, pensions paid from the Pension Protection Fund are not regarded as pensions. When is a pension not a pension? When it is compensation from the PPF. That means that those payments are not available for adjustment between the parties to a divorce. Will he do something about that?

John Hutton: These issues are generally very complex. The PPF is not actually the subject of the Bill, although I am sure that the hon. Gentleman will want to table some amendments—I am not trying to help him out there. My understanding is that it is perfectly appropriate for a court to take PPF income into account during the process of finalising the financial arrangements on settlement, so I think that there is a way through on that one. It might be more helpful if I were to write with more detail, setting out the position more fully.
	I hope that the announcement that I have made about national insurance contribution refunds will be welcome to hon. Members on both sides of the House. Today, less than a third of women reaching state pension age get a full state pension. In 2010, as a result of the Bill, the figure will reach 75 per cent. By 2020, it will reach 90 per cent. That means that in 2020, more than 300,000 extra women will be entitled to a full basic state pension when they retire, rising to almost 500,000 more by 2025. That will be a major step forward for women in our society.

Jim Cunningham: Has my right hon. Friend considered the issue of widows who inherit their husbands' pensions?

John Hutton: Yes, we have looked at that issue carefully and it has been a major concern for us. The proposals in the Bill and the other reforms that we are taking forward will be of some assistance.
	Clause 5 will restore the earnings link and allow for that to happen from 2012 or, in any event, by the end of the next Parliament. As a result, by 2050 the basic state pension will be worth twice as much in real terms as it is today. The clause also places in primary legislation the Government's pledge to uprate the standard minimum guarantee element of pension credit by earnings.
	The Government are committed to reducing the extent of means-testing in the future, thus ensuring that pension credit continues to be targeted at people who would otherwise have been poor in retirement, or those who have only small and modest savings. The clause provides the means of securing that important outcome. As a result, by 2050 less than a third of pensioners will be eligible for pension credit, with only about 6 per cent. receiving the guarantee credit alone, and it may be possible for small savings to be taken as a lump sum through the process of trivial commutation. In the vast majority of cases, those receiving pension credit will be continue to be rewarded for saving for their retirement.

John Bercow: The restoration of the earnings link and measures to increase both simplicity and intelligibility are welcome. I think that the right hon. Gentleman would accept that the overall litmus test or yardstick for the Bill should be whether means-testing will be reduced. What is his estimate of the scale of the prospective reduction over a 10-year period and a 20-year period?

John Hutton: We think that means-testing could be significantly reduced. As I said, if we do nothing now, it will reach about 75 per cent. of pensioners by 2050. With these reforms we can get the figure down to about 30 per cent., so there would be quite a significant reduction. I am trying to make the point that the majority of people in receipt of means-tested additional financial help will be those who have saved for their retirement, so they will be given a reward for saving.
	There is an argument to be had about the role and extent of means-testing in any pension system. The Liberal Democrats would remove it entirely and adopt a universal citizens pension at a totally unaffordable cost of between £10 billion and £20 billion a year. I think that we can dispense with that solution as a rational contribution to the debate, but there is an argument to be had about precisely how the balance should be struck. It is right and proper that we have a system that encourages people to save and rewards those who do so, and that is what means-testing will increasingly achieve in the future.

Anne Begg: The Secretary of State mentioned trivial commutation. Has he given any thought to the level at which that should be set, especially when the new personal savers accounts come in, to ensure that the Government give the message that it always pays to save?

John Hutton: My hon. Friend makes a good point. At present, the limit on trivial commutation is set at £15,000. It is right that that should be subject to ongoing review and continual analysis. We in the Department will do that, together with our ministerial colleagues in the Treasury. I assure hon. Members that we are aware that the matter needs proper scrutiny.

David Laws: The Secretary of State will know that Lord Turner's aspiration for the personal accounts was that for every £1 that a person saved, he or she would get £2 back because of other contributions. Is the right hon. Gentleman in a position to tell us what proportion of the target audience for personal accounts he expects to get that two-for-one return or better?

John Hutton: I think that the figures are set out in a document that we published when we produced the second pensions White Paper, but I am afraid that I do not have them to hand. If they are not in the document, perhaps we can return to the matter in Committee. We believe that the vast majority of people will be able to look forward with some confidence to receiving £2 back for every £1 put in.
	Clause 4 will abolish adult dependency increases. The existing dependency increase provisions are a hangover from the immediate post-war period when single breadwinner households were the norm. We live in a very different world today. There is no justification for the taxpayer subsidising couples when only one member has reached pension age, no matter how young the other member of the couple may be. Furthermore, entitlement to adult dependency increases is based on an all-or-nothing earnings limit that creates a disincentive for younger women who are married to men drawing a state pension. If those women earn over that amount, the state pension of their husbands is automatically reduced. The money that we are saving by scrapping ADIs is being reinvested, under the reforms, to provide more generous eligibility criteria for state pensions, so that women, in particular, can qualify for a full state pension in their own right. There is no adverse impact on those with low or modest incomes, as the increases are taken into account on a pound-for-pound basis in calculating pension credit.
	Clause 9 provides that people can accrue entitlement to the state second pension, based on new crediting arrangements. That means that about 180,000 more people, including 110,000 women, could accrue entitlement to the state second pension in 2010 through the new carer's credit. As the Pensions Commission recommended, we are phasing out the earnings relation, through provisions in clauses 10 to 12, to create a clear space for personal accounts. However, we are going one step further by replacing the complexity of the current system with a flat-rate amount of £1.40 a week on top of the basic state pension for each qualifying year spent either working, caring or doing a combination of both.
	Let me be clear: no one loses out because of the withdrawal of the earnings relation. The earnings uprating of the basic state pension more than makes up for the changes. Even the highest earners are better off—a high earner who worked from age 25 would get £102 from state pensions in 2053 under the current system, but under the proposals in the Bill, they would get £139, so the measure is not a stealth tax, as some have suggested. There are no overall losers under our reforms to the state pension system.

Mark Pritchard: What thought has been given to economic migrants—we know that there were more than 500,000 of them last year, from various countries—who settle in the UK and may become UK citizens, if they are unable to accrue 30 years-worth of contributions while they are settled in the UK? That does not appear in the Bill. Secondly, what discussions has the Secretary of State had with his counterparts in other European Union countries about the transfer of economic migrants' basic state pension contributions from their home country to the UK pension fund?

John Hutton: Entitlement to the basic state pension or the state second pension will be based on the number of qualifying years in which the person paid into it, as well as on where they live and what other rights they have when they retire. If they do not have 30 years-worth of contributions, but retire and are settled in the United Kingdom, they will be entitled to as much of the state pension as they have paid for, and potentially to a pension credit top-up, too. Those rights are portable, and it is important to remember, in the context of the European Union, that we have an obligation to pay pensions under the terms of various regulations, particularly the 1408 regulations. The system is relatively clear, and I am not really entirely sure what point of substance the hon. Gentleman was raising—

Mark Pritchard: rose—

John Hutton: No, I do not want to give way to the hon. Gentleman again. If I have not dealt with his point, my hon. Friend the Minister for Pensions Reform can deal with it in Committee.
	Taken together with the basic state pension, the simplified entitlement effectively provides a single state pension for most contributors, giving people a much clearer picture of what they can expect to receive from the state in retirement. For example, by the 2050s, someone who had contributed for most of their life through working or caring would be entitled to about £135 a week from state pensions in retirement, instead of between £90 and £100, which is what they would receive today, before the reform is made. As they could be confident that the entitlement would lift them clear of pension credit, they could plan their private saving effectively, too.

Lynne Jones: Some of us argue that the improvements in the basic state pension should be greater, and should be made more quickly, to improve the foundation for private savings, but the Secretary of State points to the issue of affordability. Is he not concerned about the fact that a large proportion of state expenditure on pensions goes towards supporting the personal pensions savings of higher-rate taxpayers? Could not some of those resources be switched to helping people on lower incomes, by improving the basic state pension?

John Hutton: In her previous intervention, my hon. Friend prayed in aid the Pensions Commission. The commission considered precisely that point and said that it was not sensible or possible to do the sorts of things that she argues we should do. In any event, let me make it quite clear that tax relief for pension contributions is not a matter for me.

Lynne Jones: rose—

John Hutton: I will not give way to my hon. Friend again on that issue because it is properly a matter for the Chancellor to consider in the normal Budget-making process.

David Laws: Will the Secretary of State give way?

John Hutton: No. If the hon. Gentleman does not mind, I would like to make progress. Perhaps he can make his points in his own speech.
	Finally, clause 13 legislates for a gradual increase in the state pension age, which will increase by one year every decade between 2020 and 2050, and each change will be phased in over two consecutive years in each decade. In making a commitment to increase the state pension age to 68 by 2046, the Bill seeks to set a course for 40 years. That is a major step for any Parliament, but it is absolutely the right thing to do. Those gradual increases will not eat into the retirement that people can expect to enjoy, as they are designed simply to match the increase in life expectancy over that period. The Pensions Commission report made it quite clear that the state pension age should increase to reflect rising longevity, and our decisions are fully consistent with its recommendations on the issue.

Paddy Tipping: My right hon. Friend is right that that is important, and it is the right policy to pursue. What would he say to manual workers with hard jobs who will not enjoy the life expectancy that others enjoy after retirement? Is there a case for looking at their specific circumstances?

John Hutton: I welcome my hon. Friend's support for the policy and I accept his concern, which is shared by Members on both sides of the House. It is worth making two points. From an historical perspective, when David Lloyd George and the Liberal Government introduced the state pension in the early part of the last century, it was payable at the age of 70—the average life expectancy for the people mentioned by my hon. Friend was barely 50—so it was not a brilliant deal. We are not proposing anything as draconian. Secondly, the Pensions Commission identified that problem and suggested that the Government continue to make sure that pension credit was payable at 60. We are looking carefully at that proposal as one way of addressing people's concerns.
	It is worth bearing in mind the fact that life expectancy has increased for people in all parts of the United Kingdom, as well as for all occupational groups. We can all look forward to a longer period in retirement, but if we want the state pension to be simpler and more generous—that comes at a price, as we all know—we have a choice. Either we try to find a way of making the additional expenditure sustainable in the long term without the need for tax rises, or we go down the easier route that some hon. Members would advocate by loading it all on to tax rises and passing the bill on to future generations. I do not believe that it is prudent or responsible to pass that problem on to our children and grandchildren, who would pay the cost of the package in extra taxes. That is dodging the issue, and I do not think that we should do it.
	While it is unpopular to talk about working longer, the simple fact is that if we are not prepared to increase the state pension age, we will create an unsustainable financial burden for future generations which, as I said, is the wrong thing to do. The increase in the state pension age is therefore at the heart of the Bill, ensuring the sustainability of the reform package and locking in the essential stability that is needed in any successful pensions policy. Part 2 implements a number of measures designed to support good quality employer pension provision by reducing the regulatory burden and making the existing system simpler for employers and providers.
	Clause 14 allows occupational pension schemes to do away with the complexities of the detailed rules on guaranteed minimum pensions by converting members' rights accrued between 1978 and 1997 into a new scale of benefits. The requirement for the new rights granted after conversion to be of at least equal actuarial value to those that they replace will properly safeguard members' interests, while the fact that a scheme is allowed to adopt a unified and streamlined benefit structure will enable administrative savings and give members greater certainty about their rights in the scheme as well as greater flexibility to transfer successfully to other schemes.
	Clause 15 abolishes contracting out for defined contribution schemes, as recommended by the Pensions Commission. During the Bill's passage through Parliament, we intend to take powers to enable us to remove the complex rules governing rights accrued in contracted-out defined contribution schemes, following the outcome of the review of the open market option for annuities that we expect to be completed by the end of the year. The removal of those rules will simplify the management of rights for both schemes and members, reducing costs to schemes and supporting our aim of simplifying pensions regulation. In addition to the measures in part 2, our rolling deregulatory review offers the opportunity for further radical change, not merely to rewrite existing legislation but to cut red tape and make it easier to deliver workplace pensions.
	My hon. Friend the Minister for Pensions Reform today announced further details of the institutional review that will consider how the functions of organisations involved in the regulation and protection of workplace pensions—such as the pensions regulator, the Pension Protection Fund and the Financial Services Authority—can best develop within our new pensions settlement. It will also extend to cover those involved in the provision of advice, mediation, dispute resolution or compensation for pensions.

Harry Cohen: My right hon. Friend has acknowledged that the private savings element is crucial. Can he give an assurance that in the years ahead, those who retire on a stock market downturn will get as fair a deal as those who retire on a stock market upturn?

John Hutton: There is a way of trying to manage risk in relation to equity investments, which is called lifestyling. It is a way of loading the risk early on in the investment programme and moving into bonds and safer investments later. The detail of how all those investment decisions are made is not properly a matter for Ministers and is not covered by the Bill. That is rightly a matter for professional fund managers to address in the way that they invest those pension investments to which we are all contributing.

Julie Kirkbride: The right hon. Gentleman has been extremely generous in giving way. I ask my question on behalf of a number of constituents who are worried—that is, a clearly defined group of people who are finite in number, who took early retirement through a private pension scheme that has subsequently gone bankrupt. The Secretary of State knows that as a result of previous changes to legislation, such people get a much reduced income, although they could not have anticipated such a change in their circumstances at the time of making those arrangements. Will he therefore consider using the Bill as a vehicle to address the wrong done to that group, who could not anticipate the change in their arrangements, given that as a result of the PPF, anybody considering taking early retirement in the future will be well aware that their income in later life might be reduced?

John Hutton: That is probably one of those interventions for which I wish I had not given way. The hon. Lady has made an important point. I raised the matter in relation to a point about the PPF that the hon. Member for Angus made earlier. The Bill makes no provision for the Pension Protection Fund. If the hon. Lady wants to table an amendment in Committee or on Report, it will give Ministers an opportunity to discuss any specific proposal that she has. The Bill makes no provision to deal with the issue that she raised, but we stand ready to consider any detailed amendment that she might wish to table.
	Part 3 provides for the creation of a personal accounts delivery authority—

Gisela Stuart: I am extremely grateful to my right hon. Friend for giving way. Has he considered giving that authority clear statutory objectives at the outset, one of which should be to minimise the effect that it has on good workplace pensions?

John Hutton: Indeed; we will do that. We made clear in the White Paper that we published in December what the express statutory remits for the personal accounts delivery authority should be. We have chosen not to set them out in the Bill because the House has not given consideration to the legislation to set up the personal accounts system, and it would be pre-emptive if the Bill sought to make provision when the substantive legislation has not been brought forward. I can assure my hon. Friend that we will introduce legislation, I hope in the next Session, and that that will be one of the express statutory objectives of the new personal accounts authority.
	The authority will be an independent body with financial sector expertise that will, in the first instance, advise the Government on the design of the operational structure of these new accounts and prepare to put in place the necessary contractual arrangements with the private sector. It will then be responsible for beginning the process of creating the infrastructure to deliver the scheme from the contracted providers.
	The creation of the delivery authority provided for by the Bill is the first step towards establishing personal accounts. Following the current consultation on last month's White Paper, we intend to legislate further on the detail of the new low-cost personal accounts, which will be the catalyst for a new savings culture in our country. They will help, rather than compel, people to save for their retirement. The accounts will be transparent. It will be the people's money, not the Government's.
	Savers will have choice over which funds to invest, and auto-enrolment will secure economies of scale so that individuals can take the benefit from lower charges and higher returns. Simple, low-cost, flexible and portable personal accounts may generate an additional £4 billion to £5 billion of new net saving each year—equivalent to about half a percentage point of gross domestic product. They will help millions of people to take greater responsibility for building their retirement income by giving them greater opportunities and incentives to save and building on the solid platform provided by the changes to the state pension system in the Bill.
	Part 4 contains a number of technical and financial provisions and provides that the operation of the personal accounts delivery authority will extend to Northern Ireland.

Philip Dunne: The Secretary of State said that the delivery authority will be independent. How does he reconcile that with the provisions in schedule 6, whereby the appointment of the chairman and the deputy chairman is at the discretion of the Secretary of State?

John Hutton: That will not compromise the independence of the delivery authority. The Secretary of State is the right person to make those appointments. I wonder who else the hon. Gentleman would entrust with that responsibility, given that the scheme is being set up by Parliament and must eventually be properly accountable to Members in this place.
	When people take out a pension, they are putting their money away for 20, 30 or 40 years, or even longer. They expect the framework in which they make that decision to save for their future to remain as stable as possible over that period. Today, we can make it clear that our intention is to help people to save with confidence. Over the past 30 years, as the Pensions Commission highlighted, the pensions environment has failed to provide that stability. On top of demographic changes and stock market fluctuations, policy has frequently changed, under numerous Governments, leaving us with what the Pensions Commission described as arguably the most complex system in the world. We owe it to our constituents and to future generations to reach beyond the normal partisanship of party politics and to establish, through this legislation, a pensions system that can truly stand the test of time.
	The Bill gives every Member of the House the chance to demonstrate, first, a strong resolve in addressing the pensions challenge that we face as a country, and secondly, the opportunity for all of us to make common cause with our constituents in helping them to plan for their own financial security in retirement. In supporting the Bill tonight, right hon. and hon. Members will take a major step towards a sustainable, affordable and trusted system that will meet the needs of those in retirement both now and in the future. That is why I commend the Bill to the House.

Philip Hammond: The Bill before us proposes to create a more generous, more widely available, less means-tested and simpler package of state retirement benefits. It will address the worst elements of unfairness in the current system and provide a platform for a workplace pension savings scheme intended to rekindle the savings habit, particularly among those on average and below average incomes. We support those objectives and we support the principles of the Bill—although, as I am sure that the Secretary of State would anticipate, there are issues that we will want to examine in Committee.
	As the Secretary of State acknowledged, the measures to achieve those objectives form a coherent package, and the reforms stand or fall together. Although the Bill contains the substance of only one part of that package—the reforms to state pension provision—and creates the mechanism for further development of the second part of the package, which is the personal accounts workplace saving scheme, we will need to consider the bigger picture as regards the problem that we are seeking to address and the Government's proposed response to it.
	The challenge that we face as a society is demographic change. In a nutshell, people are living longer, and in the future there will be fewer workers to support a larger number of pensioners under our pay-as-you-go state pension system. At the same time, with earnings outstripping increases in the basic state pension, the real value of the basic state pension in earnings terms has continued to erode. The Government's response has been a dramatic expansion of the means-tested, top-up system of pension credit. On the Turner commission's projections, if nothing changes by 2050, 75 per cent. of all pensioners will be on means-tested pension credit. That matters for two reasons.
	First, although means-tested retirement benefits have undoubtedly succeeded in taking a significant number of pensioners out of poverty, for many, the system is complex, intrusive and inaccessible. There are 1.5 million pensioners who do not claim the pension credit to which they are entitled. Half of them live in poverty. For them, the combination of the falling real value of the basic state pension and complex, means-tested pension credit means a descent into deeper poverty.

Justine Greening: Does my hon. Friend agree that the complexity of pension credit adds cost to the system? It would be preferable to pass the cost on to pensioners and help alleviate their poverty rather than investing it in a complex system that is unwieldy for them to use.  [Interruption.]

Philip Hammond: I am sure that my hon. Friend intended to say that we should reduce the costs and pass the savings on to pensioners in the form of higher benefits. I am sure that all hon. Members agree that the goal should be to reduce the administrative cost of benefit payment systems in order to use more of the available money for the people who need it.

John Redwood: Did my hon. Friend notice that the Secretary of State tried to imply that linking the standard pension only to prices was a Conservative, not a Labour policy? Is not it the case that, by 2010—the last date for an election in this Parliament that could remove the Government from office—the Labour Government will have enforced a state retirement pension that increases in line with prices for 13 years, never believing that changing it was affordable? We need to know why they believe that they can afford it if they stay in office thereafter.

Philip Hammond: My right hon. Friend is right, and I shall deal with affordability shortly.
	The second reason why the increase in means-testing matters is that, although its use has allowed poverty in retirement to be targeted at relatively low cost to the Exchequer in the short term, its expansion has a long-term cost—a reduction in the incentive to save. Since Labour came to office, the savings ratio in this country has almost halved. It is not difficult to understand why. An effective marginal 60 per cent. withdrawal rate acts as a major disincentive to saving for retirement for those who are either caught in that trap or believe that they might be caught in future.
	Now the Government propose to change tack and halt the erosion of the value of the basic state pension. The Secretary of State knows that the 2005 Conservative manifesto pledged to link the basic state pension to earnings. At the time, the Government condemned that pledge as unaffordable. We therefore welcome the conversion to a commitment to the earnings link from 2012 and the simplified contributions rules, which mean that men and women who have worked or cared for someone for 30 years will be entitled to a full basic state pension in their own right. We also accept the increase in state pension age that will partly finance the changes.
	The Government have taken major steps forward and the Secretary of State should be congratulated on his success in persuading the Chancellor to agree to the provisions, especially given the unconventional style of his charm offensive on No. 11.

Kitty Ussher: I am a little confused—perhaps the hon. Gentleman can enlighten me. My understanding of his party's policy is that it would reduce the proportion of gross domestic product that the state spends. Although I welcome his talk of consensus, I am confused about how he can agree with the broad thrust of our policy when his would reduce the finances with which his party could operate.

Philip Hammond: The hon. Lady has not done her homework. She is not quite at one with the Secretary of State, who has urged us to form a consensus. She is apparently upset by our agreeing with much of the Bill.
	Let us consider the costs. I think that it was the Age Concern brief that pointed out that, for all the Government's grandiose rhetoric, what they are actually doing is putting in place a system that will, over 45 years, use approximately the same proportion of gross domestic product to fund a higher number of pensioners in retirement. The Secretary of State has always argued that this reform package must be affordable. It is affordable, and that is why we are prepared to support it, and why it will secure consensus in the House.

Mark Pritchard: I share my hon. Friend's perhaps faint praise for the Government's acceptance of the Conservatives' policy of raising the basic state pension in line with average earnings. Does he share my concern, however, that the Government are not so enthusiastic about extending the abolition of means-testing? That might call into question the success of personal accounts.

Philip Hammond: My hon. Friend makes an important point. Means-testing is at the heart of the debate, and if he will allow me, I will deal with that matter in a moment.

Russell Brown: The hon. Gentleman mentioned his party's election manifesto pledge to restore the link between pensions and earnings. If my memory serves me correctly, however, it was not a full-blown commitment to restore the link for anything beyond one term. Does he not recognise that the pensioners of this country need and deserve a sustainable system? People are not looking for a policy commitment that lasts for only four or five years.

Philip Hammond: The hon. Gentleman is absolutely right. The commitment that we made at the last election was the commitment that it was prudent to make at that time. We have already heard today that the Chancellor has insisted that the Secretary of State's commitment will be effective only in 2012 or 2015. We believe, however, that restoring the earnings link to provide that stability is affordable now.
	The Turner commission emphasised the need for a bipartisan approach to pension reform. We agree—but not because of a lack of evidence to make a partisan case. We know who is responsible for accelerating the collapse of Britain's pension provision from the strongest in Europe to among the weakest, as the right hon. Member for Birkenhead (Mr. Field) has suggested. We also know whose decision it was to mount a £5 billion a year raid on our pension funds. We know who has presided over 60,000 occupational pension schemes entering wind-up, and who is responsible for the Government's lamentable failure to respond effectively to the challenges of the ombudsman's report and to address the needs of the victims of the pre-Pension Protection Fund pension scheme failures. We still agree with Turner, however, because, whoever is responsible for having exacerbated the problem, it makes sense in the national interest to work together to pursue political consensus in trying to sort the matter out for the future.
	The principal measures in the Bill will not be implemented until the next Parliament. Nobody knows which of us will be implementing them. The proposed changes will affect people's long-term planning and savings behaviour over a 40 to 50-year time horizon.

Sally Keeble: Does the hon. Gentleman accept that there was no point in restoring the link with earnings while so many pensioners, especially women, did not get the state pension anyway? We could have increased pension levels until kingdom come, but a large number of pensioners would have remained in poverty because they did not get the state pension at all.

Philip Hammond: With respect to the hon. Lady, I have already acknowledged that by welcoming the proposal to standardise the contribution requirements for men and women at 30 years' work or caring.
	Consensus cannot mean a blank cheque for the Government of the day. The building of consensus, however important, does not excuse the Opposition of the day from their duty to scrutinise the Government and hold them to account. A lasting consensus will be one that is built on solid foundations, on transparency, on knowledge and on a widespread understanding of, and acquiescence in, the proposed changes. It will not be one that is based on ignorance. It must be a consensus that embraces all of our society, and not one that is built in the Westminster village behind the backs of the people whom we are here to represent. Even while supporting the Bill, therefore, we must debate the unresolved question of the level of mean-testing. We must carefully consider the changes proposed, identifying the winners and losers as the state pension pot is redistributed, and we must analyse critically the proposals for personal accounts. We will therefore approach 2012 as a society that has made a set of decisions openly, with a full understanding of what we are doing, why we are doing it and what we are seeking to achieve.
	I am bound to say that we have been disappointed by the Government's management of the consensus-building process. The country at large has little or no understanding of the state pension reform, beyond the headlines of the earnings link and the increase in the state pension age. Even more worryingly, a large proportion of employers—particularly smaller ones—who will face compulsory pension contributions under the package are completely unaware of the additional burden. Closer to home, I was surprised by the Secretary of State's announcement today that he intends to incorporate new provisions in the Bill, which we are only now considering on Second Reading. We have not had any discussions about those new provisions, and know nothing about them. While we have appreciated the opportunity to have a couple of briefing meetings with the Minister and his officials, it has been difficult to obtain some of the key information required to scrutinise the proposals properly.
	I tabled a dozen or so parliamentary questions in July, seeking information about the proposed changes. Those questions fell unanswered at Prorogation in November—no doubt the victim of the Minister's traffic light scheme. Despite a ministerial promise on 15 November to answer them anyway, not one had been answered to me a month later— [Interruption.] The Minister says from a sedentary position that they have all been answered now. When did the answers arrive? This morning. In the meantime, typically, as soon as the House resumed for a new Session in November, the hon. Member for Yeovil (Mr. Laws) re-tabled all of my questions word for word. He has had a bit more success than I had; so much for consensus-building.
	To return to the substance, hanging over the debate is the unresolved difference in projections of the level of means-testing that will remain in the system and its impact on savings behaviour and thus on the likely success or failure of personal accounts.

Lynne Jones: I agree with the hon. Gentleman about the need to reduce means-testing as much as possible. There are two ways of doing that: one is to improve the value of the state pension and its universality as compared with means-tested benefits; the other is to hold down or reduce in real terms means-tested benefits. Can he assure the House that Conservative policy is no longer to do the latter, because the Conservative party was advocating that at the last election?

Philip Hammond: I assure the hon. Lady that we accept the pension credit regime put in place by the Government, including the statutory uprating of pension credit to which the Secretary of State referred. I will deal with her point in a moment.
	The Department for Work and Pensions and the Secretary of State have said today that means-testing will be limited to less than 30 per cent. of the pensioner population by 2050. However, the Pensions Policy Institute, a respected independent think tank, believes that 45 to 50 per cent. of pensioners could be affected. That is an important difference and, on balance, most people in the pensions sector appear to trust the PPI's modelling more than the DWP's. Confidence in the DWP statistics is perhaps not enhanced by, for example, the use of one figure to project the growth of state second pension income in the means-testing model, and a lower figure to project state second pension income in the model for the future cost of Government spending programmes.
	Since September, we have been urging the Government to try to reach an agreed position with the PPI so that Parliament and the country can understand the nature of the platform that the changes in the state pension system will provide as a base for the personal accounts savings system. It is hugely disappointing that the Bill should come to Parliament today with such a large discrepancy between the different projections of the future level of means-testing unresolved.
	We recognise that whichever figures are right, there is no quick or easy way of reducing means-testing. Having introduced extensive means-testing of benefits for pensioners, neither this nor any other Government would be prepared to see an increase in the number of pensioners in poverty. That is the answer to the question from the hon. Member for Birmingham, Selly Oak (Lynne Jones). No Government would be prepared to see a de-linking from earnings of the pension credit threshold, which, as it is defined, would push more pensioners into poverty. Nor is it possible for any fiscally responsible party to promise to erode means-testing by massive increases in basic state entitlements, as some have been tempted to do.
	Conservative Members, however, have a long-term aspiration to see the level of pensioners means-testing gradually reduced. I invite the Minister to commit the Government to the same long-term aspiration, so that collectively we can send a clear signal to potential young savers that the major political parties are committed to a long-term reduction in disincentives to save that might otherwise deter those savers from seeking to provide for their own well-being in retirement.

David Laws: If I heard the hon. Gentleman correctly, he said that although he was very concerned about the issue of means-testing, he would not propose to do anything to diminish the Government's own projections of the level of means-testing. Is that really his position?

Philip Hammond: What I have said to the hon. Gentleman—and I do not imagine for a moment that he would do anything different—is that we do not intend to attack the pension credit threshold, which would be one of the two ways of closing the means-testing gap in the short term. It would be a case of either reducing the level of means-tested benefits or increasing the level of basic state pension entitlement in a way that would be fiscally unaffordable. But the fact that there is no short-term ready way of dealing with the position does not mean we should not aim, over 20, 30 or 40 years—a time scale which is relevant to incentivising young savers—to send a clear message that we aspire collectively to reduce the level of means-testing in the system over time.

Lynne Jones: Will the hon. Gentleman give way?

Philip Hammond: I want to make a little progress.
	In a moment I shall deal with the part of the Bill that introduces the personal accounts delivery authority, and with the wider elements of that part of the reform package. First, however, let me draw attention to some issues that need to be addressed in the interests of transparency.
	There is a great deal of concern about the element of uncertainty over the starting date for the earnings link in 2012 which the Chancellor has introduced into the equation. We have a long-term framework for public-expenditure projections. The Treasury, we are asked to believe, cannot take a view on whether the earnings link will be affordable in five years' time, but is apparently quite happy to enter into 20-year private finance initiative contracts and the ordering of military equipment for delivery in a decade.
	It must be concluded that this is simply another example of the Chancellor's wish to have the last word on every single subject: of the "clunking fist" insisting on stamping its mark on every step that the Government take. Rather than a graceful move allowing the Prime Minister and the Secretary of State to take the credit for having the good sense to adopt our policy of an earnings link for the basic state pension, an elaborate, confusing and—if I may say so to Labour Back Benchers—politically costly contortion has been performed, so that long after the present Prime Minister and, I suspect, the present Secretary of State are gone, the Chancellor can be the one to announce that the earnings link will definitely be introduced in 2012. That, I suggest, is the worst kind of manipulation for party or, in this case, factional political reasons.
	We understand that every commitment any Government make is always implicitly subject to affordability, but given the long-term framework for public expenditure decisions, that caveat can be intended only to protect against a catastrophic and unpredicted downturn in the economy. Therefore, unless the Chancellor knows something that he is not telling us, we need the Government to be much clearer about 2012 and to say explicitly that that date will be delayed only in the most extraordinary and extreme economic circumstances. Anything less will introduce an element of doubt and confusion that will undermine one of the fundamental purposes of the whole reform package: to create stability upon which people can plan their own futures.

Lynne Jones: Although the hon. Gentleman makes many political points, it is clear from what he is saying that his party has no aspiration to reduce the level of means-testing faster than the Government proposals. I ask him to respond to a point I made earlier about higher level rates of tax relief on pensions contributions. I asked the chair of the Pensions Commission—Adair Turner—about that, and while my right hon. Friend the Secretary of State was correct in his statement about Adair Turner's view, Adair Turner said that one way of being able to release money for improving the basic state pension would be to hold down the size of the total pension pot that is available for tax relief. Would the hon. Gentleman like to comment on that suggestion?

Philip Hammond: The hon. Lady is absolutely right, and Lord Turner is absolutely right to observe that that would be one way of doing that. However, as the Secretary of State said, Lord Turner went on to say that it would not be the right way of doing that, and I agree with his analysis.
	Let me respond to the first part of the hon. Lady's question. She said that my party did not have any proposals for reducing means-testing any faster than the Government. I have made it clear that we accept that there is no quick or easy way of reducing means-testing in the short term that is both fiscally affordable and does not increase pensioner poverty, but—

Lynne Jones: Will the hon. Gentleman give way?

Philip Hammond: Perhaps the hon. Lady will let me answer her first question before she seeks to ask another. I hope in this debate to get Ministers to establish whether the Government, while recognising all the difficulty that there is and the impossibility of doing anything more in the short term, none the less harbour an aspiration in the medium to long term, when it becomes possible, to reduce means-testing further; or do they, as some Opposition Members suspect, think that means-testing of between 30 and 40 per cent. is a desirable status quo that they would want to preserve in the long term? I simply seek to establish that we are all on the same page in respect of the long-term wish list.

Lynne Jones: Will the hon. Gentleman give way?

Philip Hammond: Perhaps the hon. Lady will deal with this matter in her speech, and I can then intervene on her if that proves to be appropriate.
	The second area of concern relates to the transitional arrangements for moving from the existing required years of contribution to a blanket period of 30 years of work or qualifying caring in 2010, because, to be blunt, there are no transitional arrangements. As the Bill currently stands, there will be a sudden step down, from 39 years to 30 years for women, on 6 April 2010. Therefore, a woman with 30 years-worth of contributions who reaches the age of 60 on 5 April 2010 will spend the rest of her life on approximately three quarters of a full basic state pension, while her neighbour who reaches the age of 60 a day or two later will enjoy a full basic state pension. The average life expectancy for women at 60 years of age is 24 years, so the difference in terms of current earnings over the remainder of those women's lives would be something in the order of £26,000. That cannot be right and is bound to lead to a real sense of injustice. It offends one of our basic principles, accepted by the Government, for the assessment of the pensions reform package: that it must be equitable, and be seen to be equitable, between different groups in society. It should not be beyond the wit of a competent Government to devise a cost-neutral phasing approach that avoids the perceived injustice of a cliff edge in 2010.

Sally Keeble: I take the hon. Gentleman's point about the need for smoothing, but in addition to the basic state pension, many people will have some private savings or some form of private income for a second pension, or there will be various top-ups. It is almost certainly completely inaccurate to focus on one element of people's income post-retirement and say that they will suffer for the rest of their lives because of this cliff edge, and it is misleading for the many women who will benefit from these changes.

Philip Hammond: The hon. Lady has eloquently made the case for our canning the Bill and all going home. She has just said that the basic state pension does not really matter because there are lots of top-ups. The whole premise on which the Secretary of State is working is that we have to stabilise the basic state entitlement in order to promote saving over the long term.
	This is the point at which I was going to discuss the voluntary contributions that have been made and are still being made—an issue that we have raised with the Secretary of State on many occasions—but as a result of his announcement today, he has, perhaps happily, reduced my speech by a couple of minutes. However, I should like him to clarify one part of that announcement. Will contributions deemed by the Treasury to be precluded contributions—those that cannot increase someone's entitlement to benefit—made from the conclusion of today's Second Reading debate be refundable? I think that that is the intention behind his announcement, although it was not 100 per cent. clear whether the measure will be effective from today or from some later stage in this Bill's passage.

John Hutton: I did not intend to interrupt the hon. Gentleman, but I am grateful to him for letting me in again. The refunds will be made from 25 May, which was the date of publication of the White Paper.

Philip Hammond: Excellent. So the refunds will be retrospective, which deals with one of the concerns that, as the Secretary of State knows, we have raised. That has slightly pulled the rug from under the Minister for Pensions Reform, who said only last Monday at departmental questions that
	"contributions paid at the time should not be refunded".—[ Official Report, 8 January 2007; Vol. 455, c. 16.]
	So he was doubtless in the loop on the discussions, just as I and my hon. Friend the Member for Eastbourne (Mr. Waterson) were.
	The third issue on which I want to touch is the changes to the state second pension. We accept that these changes are part of the financing package that allows the introduction of the earnings link, while containing state pension spending within a given percentage of gross domestic product. However, there will be a distributional impact on different groups within society, and it is important that those affected by these changes understand them. Essentially, those earning above £34,000 a year will continue to pay national insurance contributions on a growing part of their earnings above that level, but will no longer receive any earnings-related element of pension accrual on those contributions. So the part of the contribution that pays for the earnings-related state second pension becomes a straight tax.
	Many in this House will be thinking, "So what? People on £34,000 a year and above can handle that." However, because this will be frozen in money terms, over time, the tax will affect everyone on £18,000 a year or more in today's earnings terms. As Amicus said in its briefing, it will affect people on average and below average incomes. For those who have contracted out of the state second pension into an occupational or personal pension plan, their contracted-out rebates will reduce or end altogether, depending on whether the scheme is defined benefit or defined contribution. So their contributions to their chosen DB schemes will be reduced, and those in DC schemes will be forced to contract back into the state second pension scheme at the very point where it is reducing the earnings-related benefits that it provides. Part of the package that may be, but it will strike many people as an odd way to promote confidence in long-term pension saving, and it has received little or no publicity outside the narrow confines of the industry and the Westminster village.
	What of the huge cash saving to the Government from abolishing contracted-out rebates? Perhaps the Government could make it clear what the figure is. The White Paper originally gave an estimate of £4 billion, and the briefing that most Members will have received refers to that figure, but the regulatory impact assessment says that it is less than £2 billion. That is a slightly disconcerting lack of precision on the part of the bookkeepers. Whether it is £2 billion or £4 billion, it has not been taken into account in the Government's overall costing of the reform package. In other words, the Government have not taken into account that cash saving. The Secretary of State has said that it, or part of it, should be used to support pension saving, but we have heard no such commitment from the Treasury. I would be grateful, as would many people outside this place, if the Minister, when he winds up tonight, could make it clear whether the Government intend that that money, or a proportion of it, will be available to support the introduction of personal accounts and funded pension saving, and whether that position has been agreed with the Treasury.
	The fourth issue that I want to highlight is the proposed change to pension savings credit that will create a band of 100 per cent. withdrawal rate for some of Britain's poorest pensioners. Those with an income just above the basic state pension with, for example, a tiny occupational pension or small amounts of savings income will be hit the hardest. Almost 1.5 million pensioners will be worse off than they would be under the existing system. For example, by 2010, a pensioner with an annual income just £250 a year above the basic state pension will lose £145 of savings credit. The Government say that that is part of the package, but hitting the very poorest savers is an odd way to encourage saving for retirement among those on lower incomes, and I urge the Minister to look again at that provision. I guarantee that our colleagues on both sides in the other place will want to do so if he does not.
	Part 3 of the Bill establishes the personal accounts delivery authority with a remit to work up the detail of the scheme that the Government have outlined or propose amendments to it. The promotion of pension saving to the millions of people who are not saving at all or not saving adequately is an essential element of this reform package. My colleagues and I had to think long and hard about Turner's proposals to use auto-enrolment and compulsory employer contributions to provide a targeted workplace saving scheme focused on the lower paid. Despite the burden the proposals will impose on business, we took the decision to support them and, by doing so, allowed the debate to move on to one about the shape and form of personal accounts. We took that decision because we believed that it was in the national interest for us to do so. But as the debate has moved on, several problems have arisen. First, the level of means-testing projected for 2050 on either model represents a serious disincentive to pension saving. The Government envisage a model based on generic advice only, but it is clear that with 30 per cent. means-testing, let alone with 45 or 50 per cent., many people will be, understandably, confused about whether they would merely save themselves out of means-tested benefits to which they would otherwise be entitled. It is unclear at this stage who will take on the thankless task of giving that generic advice, and who will pay for it. Pension saving will not be right for everyone in a means-tested environment, and in a model free from individual advice, we all have an obligation to ensure that Government do not promote saving that does not pay, with the potential for the mother of all pension mis-selling scandals.
	The issue cannot be fudged or avoided. It must be confronted head on. The Government must stop making statements like the one that the Secretary of State made earlier or the one on the Minister of State's blog that
	"even a part-time worker earning £6,000 could receive almost £2 in retirement—getting out double what they put in".
	If any pension provider made such a statement, he could expect the regulator's knock on the door about five minutes later. If we are to have an open and transparent debate about the value of personal accounts and if we are to convince people of their credibility as a long-term savings vehicle, the Government must be disciplined in the way they present the possible returns. When he winds up the debate, I want the Minister for Pensions Reform to give a commitment that the Government from now on will use the same regulated assumptions and restrictions to express projections of returns to savers in personal accounts that regulated pension providers are required to use. In that way, we will hear no more sloppy "£2-for-£1" offers; instead, projections of returns to different groups of savers will be expressed in the industry-standard, regulated form.

David Laws: I agree with what the hon. Gentleman says about the importance of accurate advice, but did he hear the Secretary of State say earlier that he believed that the vast majority of people going in for personal accounts could expect a return of better than £2 for every £1 put in? Does not that contrast with the Department's published research, which says that most people will get £1 for every £1 that they put in?

Philip Hammond: I heard the Secretary of State's earlier remarks, but I am not sure that the hon. Gentleman is exactly right in what he says. My point is that telling people that they will get back £1 for every £1 that they put in at the start of their working lives is very different from telling them the same thing in the last year of their working lives. They are two very different propositions, and that is why we have regulations that require investment providers to use assumed rates of return when they present a proposition to the public. My suggestion to the Minister is that the Government need to be equally disciplined.
	Our second concern is an overriding one, and has to do with the risk of levelling down among employers who currently offer good-quality occupational pension schemes. The personal accounts system will allow an employer either to offer personal accounts with a 3 per cent. contribution, or to auto-enrol all employees in that employer's own pension scheme, provided that it has an employer contribution of at least 3 per cent. The overwhelming majority of occupational pension schemes have employer contributions in excess—and sometimes substantially so—of 3 per cent. The evidence is that many employers faced with the prospect of much higher uptake of membership of pension schemes as a result of auto-enrolment, and thus much higher costs, will compensate by reducing their contribution level over time. If they do not do that for all employees, they will certainly do it for new joiners. The achievement of more savers but less saving would represent the ultimate failure of the personal accounts dream.
	We believe that the Government must insert into the delivery authority's remit a statutory obligation to seek to minimise the levelling down that I have described. They must set out, for the authority and for Parliament, the explicit criteria against which the scheme's successful implementation will be judged. How much levelling down is an acceptable trade-off for how many extra savers and how great an increase in total saving?
	Thirdly, personal accounts were presented as a targeted intervention to deal with the market's failure to provide pensions for people on lower incomes. The Turner commission specifically recommended a £3,000 annual contribution cap to prevent unfair, state-subsidised competition for the savings of higher earners. Like most of us, Turner thought that those people could be left to make their own arrangements.
	The Secretary of State has asserted that cherry-picking Turner is not an option, but the Government have ignored his advice. They have said that they will set a cap at a minimum of £5,000 a year—a level that would embrace more than 95 per cent. of all current members of occupational pensions schemes. In other words, the Government have moved by stealth from introducing a targeted intervention aimed at a specific and under-served group of savers to making a grab for almost the whole of Britain's occupational pension savings sector.
	That would be a disaster for the pensions industry, for occupational pension scheme members, and for the political consensus in respect of a targeted intervention. It would also make it almost impossible to measure the scheme's success in attracting its target audience of low-income savers, and I hope that that is not the Government's intention. The Government must revert to the original intention behind personal accounts, which was that they would be a targeted intervention to support people on average or below-average incomes, and that means that they must take Turner's advice on the level of the contribution cap.
	We support the principle of targeted intervention to promote workplace saving through auto-enrolment and compulsory employer contributions, but such a scheme will work only if it is based on political consensus. In trying to turn it into something other than the one Lord Turner recommended, and which the original White Paper proposed to introduce, the Government are pushing the boundaries of that consensus too far.
	The details of personal accounts will be set out in a future Bill, but I hope I have made it clear that if the consensus underpinning this Bill is to extend to the Bill introducing the personal accounts scheme, the Government must address the questions I have raised. In particular, they must revert to targeting the scheme on its intended audience.
	The need for pension reform is clear and the need for political consensus to underpin sustainable reform is even clearer. We are willing to play our part in building a robust consensus based on a solid proposition and underpinned by open and transparent analysis of the challenges that have to be addressed. As my remarks about personal accounts have confirmed, we believe that, taking the package as a whole, we have some way to go in building such a consensus. The Bill makes a good start, by delivering reforms to the state pension system that will form the foundation on which the broader reform package is constructed.
	In Committee, we shall ask the Government to answer the points about the implementation of state pension reform that I have raised this afternoon. We shall ask them to acknowledge our concerns about personal accounts by giving clear guidance to the delivery authority about the required outcomes, and to address the threat to the climate of confidence in personal accounts posed by the ongoing public relations disaster that is their record on occupational pension scheme failures.
	We welcome the Bill and I sincerely hope that by the time the Bill to implement personal accounts comes before the House, the Government will have acted to address the serious issues that hang over the future of that project, and thus rebuilt the political consensus without which it cannot succeed.

David Davis: On a point of order, Madam Deputy Speaker. On today's Order Paper there are three written statements from the Home Office: "Criminal records update", "Independent Race Monitor" and "Prevention of Terrorism Act 2005". As yet, none of those statements has been put in the Vote Office and we believe that at least one of them—"Prevention of Terrorism Act 2005"—refers to another piece of bad news; namely, the loss of another suspected terrorist under the control orders legislation. I am concerned that the Government, who should have published those statements by now, are trying to bury bad news. Is there anything you can do, Madam Deputy Speaker, to accelerate the release of those written statements?

Madam Deputy Speaker: Ministers on the Treasury Bench will no doubt have heard the point that the right hon. Gentleman made. Written ministerial statements should indeed be laid in the House promptly, and I shall have the right hon. Gentleman's point investigated.

Kali Mountford: The last time the House debated pensions we ended on a note of consensus about consensus. I agree with the hon. Member for Runnymede and Weybridge (Mr. Hammond) that that is a good place to start.
	I want to dispute with the hon. Gentleman a little, however, and travel a short way down memory lane in respect of his point about the link with earnings. He is right to have given that some analysis, but it needs a little bit more. I think that the previous Government's decision to break the link with earnings was rational and they did it for good reasons. That point bears thinking about this afternoon, as we are deciding whether to restore the link. We have to do so for good reasons. Those reasons, and the link's affordability and sustainability, must be considered in the context of why it was rationally broken, which was because the economic circumstances of the time were entirely different.
	I remember that time very well indeed. I was a parent, recently divorced and buying a house by myself for the first time. When I went out shopping in the morning, I did not know whether interest rates would have changed by the time I got home in the evening. Those were different times. It was reasonable and rational in those circumstances to take that decision when pensioners did not know whether their pensions would change or whether they could afford things any more. I believe that the Government were right to say at that time that prices were rising fast and getting out of control. It was reasonable and rational to decide that carrying on was not the right way for pensioners to move forward. There was a big debate in the House and both sides divided on what was the best thing to do at that time. Now, however, the circumstances are completely different and there are completely different controls on the economy, so it is possible to look at affordability. Now is the time to move forward.
	I want to concentrate most of my remarks on another issue—that of unfairness, which I believe has been built into the pensions system for many years because it was part of our social history and part of what we thought of as normal for family life. It was always regarded as normal for mum to stay at home and for dad to go out to work. That was just the ordinary way of things, but the world has changed and everything has to change with it.
	It is now right to look ahead at a number of issues. We were looking at a demographic time bomb in the 1980s, particularly in respect of how many people would be in work. We did not properly look forward to its impact on pensions, but now it is coming home to roost. It could be said that the demographic time bomb is about to explode. Now is the right time—looking back 30 years and looking forward another 30 years—to take decisions. If we do not take them today, we will be making a very big mistake indeed. We have to view the issues in that context. The hon. Member for Runnymede and Weybridge is entirely right in his analysis of demographic change, so now is the right time for the Bill.
	The Bill is also right in its social context, as we are seeing changes in family life and changes to work patterns. It is also right to think about young people and what we expect of them. I do not think that it would be right to tell young people that we expect them to pay for the needs of older people tomorrow so that the elderly can enjoy a luxurious retirement at their expense. It would not right be right to shift the burden of responsibility on to them. We need to draw some logical conclusions from that.
	I am left looking at a particular group of people—those who have traditionally been left out of the pension market almost altogether. I refer to working women, 30 per cent. of whom draw full state pensions, but the majority of whom do not. That is because, despite huge changes in social life, women are still the main carers. Women are still the main people who look after young children and who, at the end of their working lives, remain the main carers of elderly parents or others in the family who are in need. We have to recognise that. It is not just a family responsibility, but the responsibility of us all, because the economic impact is huge. We are talking about a contribution to the nation of billions of pounds. It is not just thousands of pounds of investment for the family, but billions of pounds of investment for the whole country. We owe these people—not only but mainly women—a huge debt of thanks.
	The Bill goes a great deal of the necessary distance. It is not just a matter of saying thank you, as thanks are worth nothing if they are not backed up with something positive. There are a number of ways of dealing with that problem. The debate that has led to the consensus considered a whole range of ways of opening up the whole Pandora's box by starting from scratch and devising a new pensions system. We could have started again and looked at how citizens could be rewarded for their contributions to society. That would have been one rational way of proceeding, but it would have been extraordinarily expensive and might have thrown away another factor that our society has grown to value. There was already an in-built consensus about it and everyone understands it. I am talking about the national insurance system.
	The national insurance system is a misnamed system. It is not really an insurance system by anybody else's standards. It is not an insurance system in the sense that means that someone gets rewarded if their house burns down. It is not that kind of insurance. It is not the sort of savings scheme that anybody else would recognise as a savings scheme. It is the kind of British system that only the British really understand. We know and love it, and we know what it means to us. There is a definite consensus about it. Everybody who pays it knows what it means to them. It was right not to scrap it, but to say, "Let's see what we can do with what we already have, and what will bring the benefits that throwing that out and bringing in a new citizen's pension scheme would have brought."
	That was the right way to go. It has addressed all the concerns about people who work, but miss out some valuable years of their adult working lives because they are making important contributions to family life by bringing up children and looking after elderly or disabled people in their family. Recognising that was crucial. Reducing the qualification period to 30 years was a simple, but crucial, mechanism. At a stroke, it achieves what an otherwise much more complex way of achieving the same end would have done. I congratulate the Government not just on listening carefully to what women were asking them to achieve and achieving that end, but on doing so in a rational way. I am grateful for that.
	I ask the Government to think again, however. I made this point in an intervention, but for the benefit of the House I will explain it more carefully. There is a group of people—it may be a small group—who I fear may get left out of all this. A person could take on a number of part-time jobs, all of which added together as though they were one job could result in an amount of money that would qualify that person to pay national insurance. At the moment, none of those jobs, on their own, would qualify for national insurance.
	A person might do one job before their children go to school, another after the last child has been dropped off at school, another after they have picked the child up from school, and another after the child has gone to bed. People fit those jobs around their family life. All the jobs are for just a couple of hours and are low paid. They are all proper jobs and they are all a valuable contribution to our economy. Added together, they do not come to a whole day's work that any one employer would recognise, but all of us would recognise them as a full day's work. However, those people pay no national insurance contributions and so do not qualify for a state pension. That has the feeling of unfairness about it. I recognise what the Minister has explained to me about administrative burdens. However, I hope that we can find a way around the problem.

Lorely Burt: I have every sympathy with the points that the hon. Lady is making. If she were successful in gaining a place on the Standing Committee, and if an amendment were to be tabled, would she be prepared to support it?

Kali Mountford: As people who have worked on Committees with me in the past will know, I am never backward in coming forward with ideas. We will have to wait and see what happens. I will explain further what I think could be done.

Russell Brown: The picture that my hon. Friend is painting implies that the issue is about people fitting their working lives around their families. She is quite right, but we also have to accept the fact that there are employers who do not offer employment to people on anything more than a very part-time basis. That means that there is no real opportunity to work the requisite hours for paying national insurance, even if employees want to do so.

Kali Mountford: Both situations arise, and, in both cases, people are falling out of the system and being disenfranchised. Some people are not getting the opportunities of others who work exactly the same number of hours for exactly the same pay, but do so for one employer—that is the problem. People working for one employer will qualify because they pay national insurance, but those about whom I am talking will not, although, interestingly, they may pay tax cumulatively. However, they may not pay national insurance in such a way, which is unfortunate because it means that they do not get their entitlement.
	I ask the Government to consider whether it would be possible to deem the national insurance of such people to have been paid. We have changed other aspects of the system to allow such credits to be made. Such a process would impose an extra burden on the Exchequer because we, the Government, would be making a payment on behalf of those people's employers. However, if we did not do so, there would be a difficulty when a person had several employers because one would have to pay the employer's part of the national insurance contribution. That could give rise to negotiations among employers that would not go very well at all, so I can appreciate that that process could be difficult. That is why I propose the simple solution of deeming a credit for those people.
	At the end of someone's working life, it might be that such credits would not be necessary because they had qualified in any event under the 30-year rule. However, would it not be sad if part of a person's working life, in which they had spent five or six years working in the way that I outlined to fit around their children, did not go towards allowing them to meet the 30-year rule and thus to qualify for a full state pension? If we introduced my proposal into the Bill, we could enhance it further.
	As I am a Back Bencher, I have not fully costed my proposal. I accept that that might present a problem for the Government and that the Bill must hang together as a whole. However, the Secretary of State has worked with me quite closely in the past, for which I thank him. Before I stretch his patience yet further with my attempts to get such a measure into the Bill, I make the plea that he work with me throughout the passage of the Bill so that, by the end of the process, it can hopefully be improved yet more.

David Laws: I congratulate the hon. Member for Colne Valley (Kali Mountford) on her thoughtful speech. I start where she started, with a note of consensus about the Bill. Although many of us have put this on record before, it is worth pointing out that the Bill has its origins in the report of the Pensions Commission. I pay tribute to the work that Lord Turner and his two fellow commissioners put in, as well as that of all the staff of the commission. The Work and Pensions Committee's report on this matter pointed out that the way in which the Turner commission operated and managed to influence the political and academic debate, and the debate in the sector, was a model for the way in which such independent commissions can work to have an impact on Government policy.
	In the spirit of generosity, I congratulate the Secretary of State, Work and Pensions Ministers and their departmental officials on managing to deliver the Bill on time, especially given the opposition in government at the beginning of the process to the substance of many of Lord Turner's proposals. It must have been tricky to secure the agreement of the Chancellor. We can only hope that his agreement will survive beyond any point at which he might take over as Prime Minister later this year. We hope that some of the proposals with which he earlier disagreed will be brought forward.
	It is worth reflecting on the effect that the Pensions Commission had in helping to forge an agreement on pensions policy. The range of issues on which there is now agreement between the three political parties is far broader than anybody could have expected, even before the last general election. They agree on the earnings link, on raising the state pension age—traditionally a controversial and sensitive issue—on the issue of women's pensions, and on a number of other key issues, including auto-enrolment. As the hon. Member for Runnymede and Weybridge (Mr. Hammond) suggested earlier, the Conservatives support the compulsory employer contribution. Those are all marked changes for the parties collectively, so it is worth paying tribute to the Turner commission and the Government for getting this far.
	I hope that the Secretary of State will excuse me for injecting a note of caution about that great consensus, because as he and other hon. Members will know, in the past there has been cross-party consensus on pensions issues on a number of occasions, and that consensus has not always lasted. Yesterday, I was looking at "The Five Giants: A Biography of the Welfare State", the influential and impressive book on the welfare state by Nick Timmins, now of the  Financial Times. In an interesting passage worth reflecting on today, he recalls the last time that there was major consensus between the three political parties on pensions reform. It was in 1975, when there were proposals to link the basic state pension to earnings, and to introduce a state earnings-related pensions system. Nick Timmins says that, in 1975,
	"After all the controversies which had surrounded pensions for two decades, the Bill which was to affect the future of pensions of millions was given an unopposed second reading with fewer than a dozen MPs in the chamber."
	There are a few more than a dozen MPs present at the moment, but we will see what the numbers are at 10 o'clock. I suspect that today's Second Reading may be unopposed, too. Mr. Timmins continues:
	"The opposition spokesman who waved it through was a fresh-faced Norman Fowler, just a few weeks into his new job."
	Of course, just a few years later, the Government who introduced the Bill were swept away. The account goes on:
	"A decade later, he"—
	that is, Norman Fowler—
	"was to attempt to consign SERPS to history.
	But in 1975, the pensions industry was desperately concerned to have its future settled after the frustrations of the previous two decades. The new scheme did provide a clear role for the private as well as the public sector".
	The Bill, essentially unchanged, became an Act, but within a few years the great hopes for a consensus proved to be a pipe dream.

Philip Hammond: Perhaps the hon. Gentleman could clear something up for me, because I am now genuinely confused about where he stands on the issue of consensus. The last time I heard a spokesman for his party speaking about the issue, he started off by saying that the Liberal Democrats supported the cross-party political consensus on the Bill, and ended his speech by saying that we should have a citizen's pension, which fundamentally undermines the principles set out in the Bill. Will the hon. Gentleman make absolutely clear to the House whether he supports the architecture proposed in the Bill, and if so, will he stop banging on about the unaffordable citizen's pension?

David Laws: I am grateful to the hon. Gentleman for paving the way for the next part of my speech, in which I will discuss our support for the citizen's pension, and the problems that will arise from building a future pension systems on the sandy, unsound foundations of the basic state pension system, even after the reforms. We have spelled out many times that although we agree with the Bill's principles, and although we believe that it heads in the right direction, we have major concerns that it will not deliver a decent foundation pension, and about the extent of means-testing. The hon. Gentleman shares many of those concerns, and I have often been on public platforms with him when he expressed anxieties about means-testing. The truth of the matter, as we discovered this evening, is that he is not prepared to do anything about it, as his aspiration is to deal with the issue in 20, 30 or 40 years' time. It is a serious problem, however, so the time scale of such an aspiration is not satisfactory.

Michael Weir: I am interested in what the hon. Gentleman has said. We have heard a great deal about consensus in the House, but is it not more important to secure consensus outwith the House about how we are to proceed? That can be done only by addressing the problem of means-testing and making improvements to the affordability of the basic state pension by offering a citizen's pension.

David Laws: The hon. Gentleman makes an excellent point. If the Secretary of State and the hon. Member for Runnymede and Weybridge listened to people outside Parliament they would realise that there is considerable consensus on the proposals and the Bill's principles. At the pensions conferences that I attend, people fundamentally agree, as far as I can establish, that we are seeking to build on a basic state pension foundation that entails too much means-testing and may therefore fail. At the pensions conference organised by the  Financial Times in November—I believe that the Minister for Pensions Reform spoke at that conference, and that the hon. Member for Runnymede and Weybridge attended, too—representatives of the pensions industry were polled on their attitude to the critical issue of pension reform and means-testing, and whether or not the Government were building on a solid foundation. My recollection is that the overwhelming majority of people who expressed a view did not believe that the Government were building on a firm foundation. The hon. Member for Angus (Mr. Weir) therefore made an excellent point by suggesting that the consensus outside the House is that the Bill is not perfect. There is support for its principles, but there are major concerns that there is too much reliance on means-testing, which is dangerous. I shall come on to discuss that.

Anne Begg: The hon. Gentleman is talking about the citizen's pension as if it were a panacea and its mere introduction would result in the abolition of means -testing. That would not be the case if the citizen's pension were introduced at the level of the basic state pension. The citizen's pension will not, in itself, end means-testing unless it is introduced at a level equivalent to the pension credit, which makes it unaffordable in the short term.

David Laws: The hon. Lady signed up to the excellent report on the issue by the Select Committee on Work and Pensions, which shares my concerns about the extent of means-testing in the system. She is quite right to say that any reduction in means-testing that does not involve cutting means-tested benefits would result in more universal state pension provision, which I believe she supports, and a higher state pension. She will be delighted that I shall discuss the economics of that proposal later.
	First, however, may I discuss the issue that has the greatest potential to hole the consensus on pensions? The previous consensus faltered after 1975 because there were essentially two problems: the first was one of affordability—no doubt, we will return to that later—and the second was one of political philosophy. In 1975, the House signed up to a formulation that required the state to be involved in the first tier of provision and to deliver a second tier—namely, the state earnings-related pension scheme. Differences over affordability and in philosophy led to the breakdown of that consensus.
	I am not convinced that those are the two points on which the present reform will falter. It is difficult to see it faltering over the issue of affordability, at least in the next 20 years or so, because as the Secretary of State knows, the deal that he has done with the Chancellor involves a reduction in the share of gross domestic product going into state pensions between now and 2020. The Minister for Pensions Reform shakes his head, but if he looks at his own report, he will see that the share of GDP being spent on pensions goes down from 6.2 per cent. now to 6.1 per cent. in 2020. He is frowning again, but he will confirm those figures when he reads the detail of his report later.

Justine Greening: Is it possible that the Minister is confused because he has not used a net present value calculation? Something similar happened when the occupational pension fund cost was calculated for the ombudsman. That may be why the Minister thinks the proportion of GDP is going up instead of down.

David Laws: The hon. Lady cleverly makes her point about the pension compensation. I cannot speculate on the reasons for the Minister not reading his own reports, but when he looks at them in detail and at the regulatory impact assessment for the Bill he will see, in black and white—we are grateful for the statistics being so clear—that between now and 2020, the share of GDP spent on state pensions will fall from 6.2 to 6.1 per cent. So the reform is not in any sense an unaffordable solution. Indeed, it is an incredibly cheap solution, which is why there are the problems with means-testing.
	I do not believe the reform will falter on philosophical grounds, either. There seems to be a relatively strong agreement, at least between the Front-Bench teams of the three political parties, and I think on the part of the nationalist parties as well, that the state's responsibility is to focus on the first-tier pension and try to take people out of poverty. The Government rely to some extent on means-testing to do that poverty prevention work. There is an assumption that the second pension will be independent of the Government, will not depend on their good will in future to continue, and will involve private accounts which individuals own. That is a different approach for the Labour party, by comparison with both the state second pension and the state earnings-related pension scheme, but it is more likely to endure.

Michael Weir: The hon. Gentleman is right. We also agree with the consensus—possibly the only part of the consensus with which we agree. However, in our view the private account will work only in conjunction with the citizen's pension; otherwise the problems inherent in means-testing arise. Why save when one will lose some of the savings through the operation of means-testing?

David Laws: I am in danger of agreeing too much with the hon. Gentleman before the Scottish and Welsh elections, so I will not flatter him unduly. Those are indeed our concerns. It will be much more difficult to persuade people to save in their own accounts if there is a large measure of means-testing.
	The hon. Member for Runnymede and Weybridge suggested that there was a band of expectation for means-testing in the future, which even under the proposals is between 30 per cent.—the Government's figure—and the mid to high 40s per cent.—the Pensions Policy Institute figure.

James Purnell: The hon. Gentleman did not answer the point from the hon. Member for Angus (Mr. Weir) about the level at which he would fix his citizen's pension. Does he recognise that even if he set it at the level of the guarantee credit, 80 per cent. of the people who are forecast to be on pension credit are above that level? Half those people are on disability premiums or carer's premiums. Does he propose to take all those means-tested extra benefits, which give people £30, £40 or £50 a week, away from them? How will he explain that to people with genuine disability and caring needs?

David Laws: What I recognise, and what the Pensions Policy Institute has already costed, is that the sort of proposal that we make would lead to a massive reduction in means-testing from the levels that the Minister is considering. I hope he will confirm that the band of expectation for means-testing for his policy is between 30 and 45 per cent.
	I do not necessarily go as far as the hon. Member for Runnymede and Weybridge in casting too many aspersions on the Government's statistics on the matter. I have no doubt that there are some very skilled and able people in the Department who have come up with the estimates. But the hon. Gentleman will understand why there is a natural instinct to believe that the Government will have used assumptions that massage the extent of means-testing down as far as possible. The Secretary of State says that these are good people and that the statistics are reliable, but during the Bill's passage we will want a much better assessment of the extent of the problem.
	The crucial issue is that of returns from the personal account. When I first saw the Secretary of State, as he was paving the way for the Bill, he said that he wanted to ensure that more or less everybody who had an account would be better off as a consequence. Over the past couple of months, the Government have had to water down that commitment by saying that some people may actually lose out. Today, the Secretary of State said that the vast majority of people could expect to gain £2 for every £1 that they put into the account, despite the effects of means-testing. I am baffled by that.

Anne Begg: Will the hon. Gentleman give way?

David Laws: I will in a moment, but I am sure that the hon. Lady would not want to get in the way of the Secretary of State clarifying this matter.
	A DWP research report entitled "Financial incentives to save for retirement", which was published alongside the Bill, says:
	"the system that we propose, in combination with the introduction of personal accounts, will see the large majority of people ... expecting a payback well in excess of £1 plus inflation for every £1 that they save, subject to factors such as investment growth and fluctuations in annuity rates."
	That is an absolutely lousy rate of return.

Philip Hammond: A zero rate.

David Laws: Indeed. That implies that people who save money in personal accounts will start by going on an up escalator in relation to the value of their contributions, because they will get the employer contribution, the money from the taxpayer and, they hope, the investment returns that are no doubt built into the Government's figures, but will then start on a down escalator because they will lose the charges, lose the income tax on the pension when they draw it out and, in some cases, lose pension credit, council tax benefit or housing benefit, while those who are self-employed will not get the employer contribution at all. The great aspiration originally set out by Lord Turner—that every £1 that goes in should be worth at least £2—seems to have turned into the rather modest expectation of £1 for £1. Even more worrying is the apparent confusion about the issue. I will happily give way to the Secretary of State if he can clarify it, because it is pretty important. Unless I have misunderstood him, he is saying that the vast majority of people are going to gain £2 for every £1, yet his report says that it will be £1 for £1.

John Hutton: I am sure that most of my hon. Friends will wonder how it is that the hon. Gentleman is not going to oppose the Bill's Second Reading. We are all in the dark about that one.
	Let me clarify the issue. I am advised that a large majority of people with a good work history, saving from the age of 25, can expect a payback of about £2 per £1 in 2012. Of course, that crucially depends on for how long they contribute to the scheme. The research document that we published states, as we must, that these figures are for illustrative purposes only. We say very clearly that as specific circumstances change or underlying assumptions vary, that could of course lead to different results.
	The hon. Gentleman criticises the levels of means-testing, but he has been unable to set the level of his universal pension. He has also been unable to find any way of explaining how he is going to fund the £20 billion to £30 billion a year that will be needed in extra public spending. As my hon. Friend the Member for Aberdeen, South (Miss Begg) said, he would need to set his universal pension at about the same level as the guarantee credit. His solution to the problem to which he draws the House's attention is simply unaffordable.

David Laws: I am delighted that the Secretary of State took the trouble to intervene. I have no intention of finishing my speech without tackling precisely the points that he raised. However, underneath the bluster he appears to be rowing back from his earlier comments. Saying that many people with long work histories will get £2 for £1 and so on is different from his earlier comments. Then, he said that the majority of people who joined the scheme would get £2 back for every £1 invested, yet despite those remarks that is clearly not the Department's position, which is that the large majority can expect £1 back for £1 invested.
	Perhaps there is a consensual way ahead and I therefore look forward to the winding-up speech of the Minister for Pensions Reform and his telling us the proportion of people in the target audience for personal accounts who will be subject to means-testing. The proportion is bound to be higher in the target audience for personal accounts than the cited 30 per cent. Is the figure 40 or 50 per cent?
	There appears to be much uncertainty and I should like to know the proportion of the target audience that can expect £2 back from investing £1. That is critical. Our ability to persuade people that it is a no-brainer to save in the personal account depends heavily on the perception that for every £1 one puts in, one gets £2 back, because even without the investment return one gets the employer contribution and the taxpayer contribution. There are few other investment vehicles that can easily provide guarantees such as £2 for £1. It then becomes easy to sell personal accounts.
	However, if all the Secretary of State can say is that the majority will get £1 for £1, that is hopeless. Many people will be especially vulnerable to losing much of their savings. They include older people, those on housing benefit, the self-employed and those with broken work histories.

Anne Begg: Will the hon. Gentleman give way?

David Laws: I shall give way when I have finished my point. As the hon. Lady knows, some people have enormous debts, which they may be paying off at high interest rates. They will not want to save money in an account that gives them no return when they need to pay off debts on which they are paying interest rates of 30, 40 or 50 per cent. I apologise to the hon. Lady for keeping her waiting.

Anne Begg: The mention of housing benefit reminded me to intervene. The hon. Gentleman has still not made clear Liberal Democrat policy on, and attitude to, means-testing. All that he has said today and on previous occasions suggests that means-testing is bad and should not form part of the system of income that we pay to pensioners. As the Minister for Pensions Reform pointed out, doing away with means-testing would mean that the citizen's pension would have to be considerably higher than the income guarantee simply because there are means-tested benefits such as housing benefit, carer's benefit and so on. Do the Liberal Democrats want to do away with housing benefit, which is means-tested and important for pensioners, or does the hon. Gentleman claim that means-testing is dreadful except for the poor, for whom it is okay?

David Laws: We are clearly saying that the amount of means-testing that appears to be built into the Bill is in danger of causing mass Government-sponsored mis-selling or deterring people from saving in the personal accounts. I ask the hon. Lady to reflect on the sense of a position whereby as many as 50 per cent. of the target audience for personal accounts may lose money and have low investment returns. The report that I cited earlier, "Financial incentives to save for retirement" has several omissions, not only the hidden bit about £1 for £1, which make it clear how dubious the benefits will be for many people.
	There is also an admission in the Department for Work and Pensions' report that
	"people may see a lower expected payback due to complex circumstances such as entitlement to housing benefit and council tax benefit, as well as pension credit."
	Most people would not regard the entitlement to housing benefit and council tax benefit as involving complex circumstances. Many of the people in the target audience for personal accounts are on housing benefit and council tax benefit. The report goes on to show that the difficulties involved in the means-testing will be even more significant— [ Interruption.] I am delighted that the Secretary of State is heckling me. I suspect that I am hitting a sore nerve. The report states:
	"However, a level of payback cannot be guaranteed, and the choices and characteristics which may leave a small number of people at higher risk of low payback may not be apparent to either individuals or Government during working life."
	Not only will many people lose money under this scheme but, because of the degree of means-testing, many of the people who start personal accounts will not know at the time whether they will get a decent return. I would be happy to give way to the Secretary of State if he wishes to comment on that.
	Those are not my facts—they are the facts in the Secretary of State's own report, which he does not appear to have read. They make it increasingly clear that the rather sensitive and self-conscious statement that he made on personal accounts on 12 December to the effect that
	"We have already acted to make sure that the state pension provides a solid platform on which people can save."—[ Official Report, 12 December 2006; Vol. 454, c. 739.]
	is not true. When the Secretary of State— [ Interruption.] I am coming on to how we will vote on pension legislation. I assume that he wants to encourage the process of consensus, but it does not sound like it, given the nature of his sedentary contributions.
	I urge the Secretary of State to reflect on the report from the Pensions Policy Institute entitled, "Are Personal Accounts suitable for all?". I have no doubt that he will have read it, and he will therefore know that it contains examples of some of the at-risk groups ending up, in extreme circumstances, getting only 5p or 15p on £1 back for £1 of saving. The extent of the means-testing that is embedded in the proposed system and the inability of the Government to say whether the vast majority of people will get a two-for-one return pose a serious risk to the consensus on pensions.
	Our position is that, although we support the principles behind the Bill, we want to see serious efforts being made to deal with this problem before the Bill to introduce personal accounts comes before the House this autumn. I thought that I detected that view being expressed by the hon. Member for Runnymede and Weybridge as well. We could not, in all honesty, warmly support that Bill if we had serious concerns that there was going to be mis-selling or that many people—particularly those on low incomes—were going to lose a large amount of their savings in personal accounts.

Sally Keeble: I am intrigued by what the hon. Gentleman is saying. He is arguing that personal accounts will not incentivise saving, but his proposed citizen's pension would disincentivise anyone from doing anything at all. People would rest secure in the knowledge that, later in life, they would receive a high level of universal pension. However, my constituents do not believe in a something-for-nothing society. They believe that what they get out should reflect the contributions that they have made. Women argue that their home caring responsibilities should be acknowledged for the contribution that they make to society. Although the concept of a universal pension has attractive features, it is wrong in some of its political and technical aspects.

David Laws: I understand the hon. Lady's point, and she is entitled to put forward that view. I must remind her, however, that her great commitment to the contributory principle is soon to be manifested in her willingness to vote with the Government on diminishing the significance of the contributory principle by reducing the number of years of contributions needed to get a full basic state pension. No doubt all sorts of other modifications will be put in as well.
	The serious rock underlying the Bill is the means-testing. We can have our political debates in here, and the Secretary of State can heckle from the sidelines, but when he and the Minister for Pensions Reform go around the country, they will find that my concerns are exactly the concerns not only of the consumers who will have to make these judgments, but of the industry itself.

John Hutton: rose—

David Laws: I should be delighted to give way to the Secretary of State.

John Hutton: I am grateful to the hon. Gentleman for giving way and I promise to stop heckling him, but only if he stops saying what he is saying. My hon. Friend the Member for Northampton, North (Ms Keeble) made a good point about how the contributory principle contrasts with the universal residence-based pension that the hon. Gentleman is proposing. He has suggested that he is unlikely to support the second pensions Bill— [ Interruption.] Well, he said that his position on that was not clear. We understand that, but will he at least confirm that he will vote with the Government and the Opposition in support of this Bill tonight?

David Laws: We made that clear right at the beginning of the debate. The principles behind the Bill are so in line with our thinking that the Secretary of State would be the first to accuse us of breaking the consensus— [ Interruption.]

Madam Deputy Speaker: Order.

David Laws: Thank you, Madam Deputy Speaker.
	I am not surprised that the Secretary of State is spending so much time reflecting on our plans, because he is so sensitive about the weakness of his own. That weakness is being discussed out there in the country, as he will discover when he goes out and talks to consumer groups, businesses and pension providers. These are their concerns.
	The hon. Member for Runnymede and Weybridge said earlier that people acknowledge that there is a risk of averaging down attached to the Government's proposal to set a benchmark for personal accounts in terms of the employer's contribution. There has to be some risk for the more marginal employers in those circumstances. Whether the Secretary of State likes it or not, however, what people out there really fear is not only some averaging down in existing provision, but that the personal accounts will not work. The Government could give generic financial advice on the matter, although the Secretary of State seemed unable to do so today, even in broad terms. The key factor, however, is that people's economic interest in investing in the personal accounts must be clear, but at present it is not. I heard some Labour Members expressing concern about that earlier and I hope that the issue will be addressed in the debate.
	I want to touch on a number of other key issues before I return to the question of affordability, on which I know that the Secretary of State will be desperate to intervene on me again. The first issue of concern is the earnings link. The Secretary of State expressed concern earlier when he was questioned about the frustration of people over the delay in restoring the link. Either he has not been getting out and about enough in his constituency or he was being somewhat optimistic about the perception of the Bill across the country. Hon. Members on the Back Benches, who can speak fairly candidly, know that members of the existing pensioner generation are immensely disappointed that the restoration of the earnings link is to be delayed until 2012 or even 2015. I am sure that if the Secretary of State and his Front-Bench colleagues were being perfectly straightforward, they would admit that they were deeply unhappy and embarrassed about the fact that the Chancellor has refused to allow them to make that commitment sooner.
	The Secretary of State must know that millions of those in the existing generation of pensioners could be dead by the time the earnings link is restored. It could take until 2020 to get back to the level of state pension in relation to earnings that existed when these decisions were made in 2006, because until 2012 or 2015 the basic pension will continue to shrivel away in relation to average earnings. I cannot understand why the Government are not more embarrassed about that.
	It was intriguing to hear the Secretary of State's response to an intervention from the right hon. Member for Woking (Mr. Redwood) about the ambiguity in introducing the earnings link in 2012. He said that the Government could not introduce it earlier than 2012 because of the timing of the increase in the basic state pension age, which implies a link or coupling between the two. However, the Government are dealing with those two things in a completely disconnected way. They have made it absolutely clear that the basic state pension age will be increased in 2024 come what may, even though no commitment whatever has been made to a firm date for the earnings link restoration. If the Government want to delay restoring the earnings link until beyond 2012, surely it is logical for them to consider delaying the introduction of a higher state pension age, too.
	I hope that the Minister for Pensions Reform will comment on the discretion that the Bill allows the Secretary of State to exercise in fixing the average earnings measure that will be used. Perhaps that should not greatly worry us and he will put our minds at rest. As the Bill makes such specific provision, however, and as so many different measures of average earnings could be used, I hope that some clarification will be made.

James Purnell: I hope that I can set the hon. Gentleman's mind at rest. The arrangements proposed in the Bill are similar to those that exist for inflation, which allow some flexibility. The measure that we propose to use is the same as that which we use currently for uprating guarantee credit in line with average earnings. Such matters change over time, however, and it is important to leave the Government of the day with flexibility in that regard.

David Laws: I am grateful to the Minister for his clarification. I hope that we will seek to embed in the Bill the intention behind his comments. We are legislating not only for the period in which this Government will be in office but, he hopes, for the long term. We must therefore ensure confidence that the method of uprating will not be twisted around in the future.
	I hope that I am equally successful in getting the Minister to intervene on one other point in relation to the earnings link. It might be regarded in some places as a small point, and he will no doubt smile again when I mention it; I have mentioned it to him before. The issue is that of the frozen pensions of about 1 million UK citizens who now live abroad. The obvious injustice is that half those pensioners will get their pensions uprated by prices, and half will get no uprating at all in future.

Anne Begg: Will the hon. Gentleman give way?

David Laws: I have given way a number of times to the hon. Lady.
	When the earnings link is introduced, that bizarre injustice will be increased. The Minister can intervene on me if I have got this wrong, but my understanding is that half of the UK pensioners living abroad in future will have an earnings uprating, and half will have their pensions frozen. The decision on whether people get an uprating will not depend on any great logic, but on an arbitrary, historic division of those countries that are and are not uprated. People who live only a mile apart but on different sides of a border, such as that between Canada and the United States, could receive totally different pensions. The existing anomaly will therefore be made even more confusing.

Russell Brown: Out of curiosity, may I ask the hon. Gentleman whether those 1 million people who have left this country would be entitled to the citizen's pension?

David Laws: There is no discrepancy. If someone is entitled to a citizen's pension and has paid their taxation, of course they should be entitled to the uprating. The hon. Gentleman cannot, however, justify the Government's proposal under which a British pensioner living in Canada will in future have their pension frozen, whereas a British pensioner living in the United States will get an earnings uprating. Is the Secretary of State happy about making an existing injustice even worse through the restoration of the earnings link?
	I shall make progress, as other Members want to speak— [Interruption.] I hear demands for me to raise other points. If my hon. Friend the Member for Solihull (Lorely Burt) catches your eye later, Mr. Deputy Speaker, she will want to raise some of the issues and concerns about women and carers. The Government could go further on some of those points. I welcome the speech of the hon. Member for Colne Valley, who picked up on one anomaly that may arise. I hope that the Minister for Pensions Reform will comment on the issue raised by the hon. Member for Runnymede and Weybridge about the money from scrapping contracting-out of defined contribution schemes and what it will be used for. That is an extremely important question.
	The Secretary of State raised the issue of affordability and the price that we ought to pay for getting the pension system right. Our contention is clear—the Government are building on an insecure and sandy foundation, which will undermine the personal accounts scheme. In that respect, our argument is exactly the same as the Conservative party's, except that we are taking it to its logical next step. We are saying that something should be done about it, rather than simply aspiring, as those on the Conservative Front Bench have done, to finding some money to do something about it in 20, 30 or 40 years' time.
	On affordability, I understand that the Secretary of State must operate within the plans laid down by the Government. It is notable that the Government are seeking to deliver pensions reform while cutting the state pensions' share of GDP. It is no good the Secretary of State shaking his head—that is precisely what his figures show. That is why we have such a problem with means-testing.
	The Secretary of State needs to pick up on two issues. As he knows perfectly well, we would introduce a citizen's pension using the offset method at about 0.4 or 0.5 per cent. of GDP. That, of course, is a significant amount. The issue, however, is what the consequences would be of not finding the money, over a period of time, to improve the basic state pension. If the consequences are that the entire pension reform programme is undermined, spending such money would be sensible.
	Had we asked the Secretary of State, who was a Health Minister for a considerable period, to comment in 1996-97 on what increase in expenditure would be needed to deliver a decent NHS, he would have been constrained in his answer by the limited commitments made by the then shadow Chancellor. If any of his hon. Friends had suggested that the share of GDP spent on health should increase by 2.3 per cent. over 10 years—five times the amount that we are talking about for a reform of state pensions—he would have regarded such a proposal as idiotic. However, that is what has happened. The Government are spending £65 billion more in cash terms than in 1996-97 on the NHS, and £50 billion more in real terms.
	Anybody can seek to influence the debate and scare ill-informed opinion by waving large numbers around. However, over time, Governments who seek to make a priority out of particular areas of expenditure can do so, as the Government's record on the NHS has shown. If the Government want to find some savings to improve the state pension architecture, I hope that they will adopt exactly the proposal suggested by the Select Committee on Work and Pensions—with the support of the excellent hon. Member for Aberdeen, South (Miss Begg)—and establish a commission to look into the reform and sustainability of public sector pensions.
	The current feeble proposals for reform mean that a Government who propose to cut the share of GDP going into the state pension architecture over the next 15 years are miraculously finding the money to raise the share of GDP to be spent on public sector pensions by 50 per cent. Finding the money to spend on public sector pensions before finding the money to put into the basic state pension architecture indicates a bizarre set of political priorities. If the Minister wants to find money for his reforms and make the pensions system work, he should consider reforming public sector pensions and adopting the Select Committee's proposal.
	Ultimately, the Government must decide whether or not the pension reforms will work, and the biggest obstacle to their successful operation is the extent of means-testing. If the Government do not take account of shared concerns about that problem they may find that while, as in 1975, there is a loose consensus on the principles of reform, it is likely that in 20 or 30 years we shall be looking at a set of reform proposals that have failed to deliver on their basic objectives.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. Before I call the next speaker, I should tell the House that further to the point of order raised earlier by the right hon. Member for Haltemprice and Howden (David Davis), the Home Office has now placed in the Library the three ministerial written statements that were due today.

Sally Keeble: I was interested by the speech of the hon. Member for Yeovil (Mr. Laws). I think that the thrust of some of the Liberal Democrats' political arguments about the citizen's pension is wrong, and that any amount of special pleading about the technicalities will not deal with the basic underlying issue of whether pensions should reflect something of the contribution that people make during their lives.
	Having listened carefully to my constituents, I believe that they expect there to be some link between contributions and pensions. They do not expect people to be left with nothing, but they do expect people's input during their working lives to be recognised when they retire. In particular, the contribution made by women as carers should be valued. I am very pleased that, probably for the first time, that important issue has been dealt with. It is well understood by my constituents, and many women, especially Labour Members of Parliament, have campaigned for it to be built into our pensions system. I pay tribute to the former Member of Parliament for Sheffield, Hillsborough, Helen Jackson, who did a huge amount—lobbying the Government and lobbying around the country—to ensure that the inequalities faced by women in retirement were remedied.
	I was first made aware of the importance of women's pensions shortly after the 1997 election, when I was going from door to door speaking to prospective constituents. I met a woman who had had a miserable marriage. She had worked throughout her life, but had paid the married woman's stamp. When her children had grown up and left home she divorced her husband, who was some years older than her. Then, at the age of 58, she had been swept off her feet and had married a much younger man, a sort of toyboy.

Paul Flynn: Hear, hear. Splendid.

Sally Keeble: My hon. Friend clearly approves of that. Two years later, however, that woman found that she had lost her pension. As a married woman who had worked and been financially independent throughout her life, she was told that she could not have a pension until her husband retired. To say that she was spitting teeth would be putting it mildly. It was she who first brought home to me the level of women's understanding of pensions, or at least their understanding, through bitter experience, of poverty in retirement.
	The Bill will make a big difference, and I am very pleased that for the first time ever the disadvantage inflicted on women pensioners has been recognised by the Government. The Bill would deal specifically with the problem of the constituent who first alerted me to the issue, because it allows women who retire before their husbands to obtain class B pensions without having to wait for their husbands to retire. It will therefore bring direct and practical benefit to a large number of women.
	Other elements in the Bill will right the wrongs that have left so many women pensioners in poverty. At present, one in five single women pensioners risk being in poverty owing to their different working patterns and the impact of child care, widowhood and divorce. The effect of divorce has not been sufficiently recognised. In 2002, 40 per cent. of divorced older women were in receipt of minimum income guarantee, and nearly 63 per cent. of divorced and separated older women currently have no private pension income at all.
	The Bill deals with a number of complex and detailed issues. Several have already been discussed today, so I shall deal with just four.
	Clause 3, an important clause, concerns pension credits for parents and carers. A welcome aspect of the Bill is the extension of carers' ability to claim the credits that they need in order to obtain pensions, but it is important for the new entitlement provisions to be drafted widely enough. That is something that worries carers' groups. Constituents have expressed to me a fear that in its present form the Bill may be too restrictive, as it defines entitlement according to existing regulations or in terms of benefit entitlement, including, in the case of those caring for children, entitlement to child benefit. That means that some carers may miss out. It might be more constructive to replace or supplement the proposed arrangement with a system of certification by local authorities. There would be logic in that, as local authorities—through the director of education and children's services, and through social services departments—are responsible for commissioning care for children and vulnerable adults. They would therefore be able to issue certificates identifying the carer and the amount of care being provided.
	Let me give an example that has arisen a number of times in my constituency. There is a high level of employment among my constituents, and women have traditionally worked. My constituents are also very family-orientated. If—unfortunately, this is a frequent reason for family breakdowns—a lone mother has become involved in substance abuse or her physical or mental health collapses, the grandparents will often take in her children and, in many cases, care for them into adulthood. In some instances, a grandmother who is still of working age must give up her job. In others, the grandparents will not obtain the child benefit book. Not wishing to bother with the bureaucracy of having it altered, they may deliberately leave it with the children's mother to maintain a link between her and her children, and perhaps also to encourage her to think about getting the children back.
	I understand that, in such a case, a grandmother would not be able to obtain credits towards a pension because of the work that she had done in caring for the children, unless she could qualify as a foster parent. I have contacted social services departments on several occasions about the possibility of securing foster payments for grandparents, but I am not sure that they could qualify as foster parents, which is what I gather the legislation requires. Carers who look after a number of different people for shorter periods would not qualify either, unless the hours were right. Moreover, carers would have to be claiming the right benefits. Disability living allowance must be at the higher or middle rate, not the lower rate. Parents, or in many cases a lone parent, with a number of children receiving the lower rate would have to stop working to look after them.
	I hope that my hon. Friend the Minister will give some indication of Government thinking, and will say whether he is prepared to consider the possibility of local authorities' being able to issue certificates stating who is or is not a carer. We certainly need some way of ensuring that people with a valid status as carers can obtain support without having to be in receipt of all the right elements of benefit.
	Another issue that has often been raised with me is not addressed in the Bill. Overlapping benefits and entitlement to mobility benefits affect pensioners generally and also carers, but the Bill is silent on them. I wish to discuss two particular points, one of which is pensioners' rights to carer's allowance, the entitlement to which currently ends at retirement. I hope that I am correct about the technical points on this matter, but if not, I am sure that my hon. Friend the Minister will put me right. The withdrawal of that allowance means that pensioners caring for disabled spouses or for children do not get support for performing that caring role. The theory is that because carer's allowance reimburses people for lost income as a result of their caring, it is not appropriate for pensioners. However, for people in that situation it appears simply that once they hit retirement age recognition of their caring role is lost—as is the fact that such caring is, indeed, work. I presume that when the state retirement age increases, the entitlement to carer's allowance also increases, but I would appreciate clarification on that, and also on whether there might be any relaxation of the rules in respect of pensioners' rights to access carer's allowance. I have written on several occasions to the Department about the issue, which continues to be a source of considerable grievance to many of my constituents.
	The second issue to consider is the ability of pensioners to get the mobility component of disability living allowance. Once people start receiving pensions they get attendance allowance rather than DLA. That restriction is bitterly opposed by my constituents. We enjoy greater longevity and have increased expectations of a good quality and standard of life when we are older; my constituents—in common with those of other Members—expect to remain mobile until they are much older than did previous generations. I visited a constituent at home shortly after she had had, at the age of just over 60, both of her legs amputated. She was refused any help to get mobile. She had been used to driving and had previously led a mobile and active life, but just because she was retired, she was told that she would not get as high a level of support as she might otherwise have received. That was difficult for her to accept. Will my hon. Friend the Minister say whether any further thought is being given to such support for pensioners?
	On the entitlement of part-time workers to pensions, the reduction in hours worked for people to qualify for state pension is very welcome. As a result, many more women will be entitled to the state pension. Despite what the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, it would have been wrong to have dramatically improved the value of the state pension when that would have left so many pensioners still in poverty simply because they are women and so they do not get the state pension at all. I look forward to the value of the state pension being increased once the proposed changes are in place. Those changes will also mean that more people—up to a total of 70 per cent. I think—are included in the state pension net.
	There is still an outstanding issue related to the qualification of part-time workers. Many women in my constituency make up their working week by working a number of shifts for different employers—working flexibly to meet their family commitments and their financial needs. That has been of benefit to the local employment market and the local economy, as well as to local families. Some such women might work eight hours for one employer, eight hours for another and four for another, and yet they still might not qualify for a state pension. Will my hon. Friend the Minister look at the possibility of easing up on the rules so that more part-time workers are able to qualify for the state pension?
	My final point, which overlaps with those made by several other Members, is to do with the provision of information and the personal accounts delivery authority, which the Bill will establish. I welcome that, and I regret the early efforts to undermine a new savings scheme for pensioners that should give people the cornerstone for independence in their retirement based on the savings that they have made during their working lives. That is the right way to proceed, and the loss of that linkage has been profoundly damaging to people's security in retirement. It is also right that the scheme should be compulsory—which would mean, of course, that there would be auto-enrolment. But there is a caveat. In the past, people have asked me what sanctions might be imposed on those who do not make private provision. However, there must still be a secure safety net for people who are not able to, or who, for one reason or another, do not, make private provision. The Bill provides only for the outline establishment of the authority—the detail will come later—but I ask the Minister to comment on how the difficult issue of information and advice will be handled.
	Every time that there has been a major problem with pensions, usually the heart of that problem has been to do with the provision of information—not merely the detailed advice on what people should get, but the basics of the information. The pensions mis-selling scandal, for which the Conservative party was responsible, was largely to do with Government advertising that encouraged people to take out private pensions. I remember an earlier debate in this House when those advertisements were waved around and their terms were read out. The widows' state earnings related pension scheme debacle—constituents of mine provided one of the test cases considered by the ombudsman—also centred on the provision of information and whether people were given notification about the changes at the right time.
	Recent problems with occupational pensions have also been caused by issues related to the provision of information.  [Interruption.] Yes, I take on board the point that the hon. Member for Hemel Hempstead (Mike Penning) makes. One of the issues that got women into pension difficulties was the married women's stamp and what information women were or were not given when they signed up to it. A steady stream of women have come to my advice surgery saying that when they signed up for it they did not understand that that meant they would not get their own proper pension. I have looked into that. Employers have provided forms that show that the women had the necessary information and that they ticked the boxes and signed the papers, but many women argue that they did not understand what they were doing when they signed for that stamp. In my first jobs, I had the married women's stamp, and I know exactly how it felt to sign something and then later to find out that I had, to an extent, signed away my future.

Anne Begg: In terms of the married women's stamp, the problem was not that the advice from the Government was wrong; in fact, it was correct. The problem was to do with individuals' understanding of that advice. My mother was told, "It doesn't affect your pension", but what those who told her that meant was, "It doesn't affect the pension you will get through your husband", which it did not. Therefore, advice might be correct, but someone's understanding of that advice might be flawed, so it can be argued that the Government cannot be held to account because someone did not understand the clear advice that the Government gave at the time.

Sally Keeble: I take on board that point, and I have had an argument about that each time I have raised this issue. None the less, what women will say is, "I didn't get the advice." What they heard and what they were told might be two completely different things, but the end result is that many women were left in poverty in retirement because what happened to them was unexpected and they had not made provision, whereas if they had thought things through—if things had been slightly different—they would have done so. Some of them say, "I could have paid it, but I didn't because I thought I'd still get a pension; so things went wrong." Things are different now, in that women earn more and their employment status has changed, but it is really important that we get it right this time.
	Who will be responsible for providing not just detailed advice some way down the line, but the initial information: the employer, the new authority, the Government or the new national independent financial advice service that the Government heralded this week? What arrangements will be made to ensure that the information is comprehensible? One difficulty is that pensions is a very obscure and complex subject. With the best will in the world, it can be very hard to ensure that the information provided can be understood by the general public, as well as by the experts. We need to be sure that people know what is happening to their money and what choices they can make, and that they do not find 30 or 40 years down the line that they are paying the price of a badly worded leaflet, or of having been given some unclear information.
	The Bill will go a very long way toward righting a wrong that has caused misery to many women in retirement. I have asked my hon. Friend the Minister for some assurances and further information, which I hope he will give, but as I understand it, 500,000 more women will get full-time state pensions as a result of this legislation. I hope that it will ensure that people make personal provision for their future security, mark the end of a long-running injustice that many women in my constituency have experienced, and provide them and their families with real security in old age.

John Butterfill: I welcome a great deal of what is in the Bill, and I pay tribute to the extensive consultation that has taken place through Turner, discussion of the White Paper, the Select Committee and the all-party committees of this House. I pay particular tribute to the hon. Member for Birmingham, Selly Oak (Lynne Jones), whose all-party group on pensions consensus has contributed considerably to getting us where we are today. Having said all that, if I now say a few things that might be construed as slightly critical or ask awkward questions, I hope that I will not be accused of slagging off the Bill in the way that the hon. Member for Yeovil (Mr. Laws) did for nearly 45 minutes—only then to say that he was going to vote for it.
	Personal accounts are a good idea for all sorts of reasons. At the end of the day, they will encourage a savings culture, and I hope that the idea will eventually be built on in the same way as in Australia, for example. However, it will not suffer from the disadvantage of the Australian system, which is entirely compulsory. There is an opt out for those who may be advised—one hopes that generic advice, at the very least, will indeed be provided—that it would not pay them to enter into the system. The Bill has that element of flexibility, but it creates a structure that can be built on for the future, and it might mean that a lot of people will eventually be a good deal better off in retirement than they would otherwise be. The initial figures are in fact very modest. The total sum is about 8 per cent. of pay, which will not provide anybody with a realistic pension during their lifetime, so they will still be dependent on state support. However, it is a start, and, as such, a good thing.
	I am a little concerned about the possible impact on existing employer schemes. There is a danger that employers might trade down in terms of what they provide for their employees because of the existence of the new system, or that it might undermine the operation of some existing employer schemes. The personal accounts delivery authority will have to look at that issue very carefully.
	The personal accounts delivery authority will have a considerable role in, and influence on, the scheme's design, but it is not entirely clear from the Bill as published what the precise objectives will be. Will they, for example, be the same as the objectives set out in the White Paper? How will the authority deal with investment strategy, and will it deal with generic or other advice for employees? Going beyond that, can the Minister explain why it is proposed that the authority, having finished its work, will hand it all over to a personal accounts board? Why will all the expertise built up in the authority be scrapped and handed over to somebody completely different? There must be a case for considering whether the board—the successor body—is in fact a natural evolution of the authority.

James Purnell: rose—

John Butterfill: The Minister seeks to intervene but if I may, I shall deal with another couple of points first. I will be very pleased to give way to him in a moment, so that he can answer these points.
	As I was saying, an element of expertise will have been built up by PADA, as we may come to call it. One other thing that puzzles me about the current proposals is that it is not intended to involve the various stakeholders ab initio; for some reason, they will become involved a good deal later down the line. Surely it would be much better to involve them from the start, when we are looking at the scheme's design, rather than leaving it till later on, when certain elements may have been set in stone. I now give way to the Minister.

James Purnell: There will not be time at the end of the debate to reply to all the points made, so on this very important point, I want to reassure the hon. Gentleman now that he is absolutely right: one would expect a large degree of continuity between the delivery authority and the personal accounts board. All that the Bill is doing is establishing that they will be differently legally constituted organisations with different responsibilities. It may not be that every single person carries on from one organisation to the other, but the hon. Gentleman makes the very good point that the expertise should be maintained and that stakeholders should be involved from the very start in developing policy. However, there should not necessarily be strict representation on the board of every stakeholder; otherwise, it might not be able to be as flexible as we would like.

John Butterfill: I am very gratified by the Minister's response; there could otherwise have been a lot of wastage of effort and expertise.
	I have some concerns about the reforms to the second state pension. The earnings-related element is set to disappear. It was said earlier that that will not be unfair to above-average earners because they will get the same as everybody else, but they will surely be paying more, so at the end of the day they will be paying more for less; I do not see how that can be avoided. I am also concerned about the effect on defined-benefit schemes, which will suffer from the lower contracted-out rebate. They are already in some difficulty, and not everything that the Government have done to date has encouraged the companies that provide such schemes. The reforms will make life rather more difficult for them, which I would have thought was the last thing that the Government wished to do. At the same time, the take-home pay of their employees will be reduced. Those two things make that particular element of the second state pension reforms rather difficult to understand.
	On guaranteed minimum pensions, I am delighted that the Government are getting rid of this extraordinarily complex and contentious regime. Employers have made many mistakes with GMP, and the advice given by lawyers has often been contradictory. I am sorry to say that the advice given by the National Insurance Contributions Office has also sometimes been wrong and contradictory. That even happened with the House of Commons scheme, the board for which I have the honour of chairing, so anything that reforms GMP will be a good thing. However, the initial reform proposals look extremely complicated, and I hope that they can be made as streamlined as possible. If we can in some way get rid of the whole thing in one fell swoop and remove the burden from employers, that would be welcomed by everybody I know in the pensions world. The situation on the abolition of contracting out for defined contribution schemes is different and, on balance, will probably be a good thing. It is the defined benefit schemes that I am worried about.
	All the hon. Members who have spoken today have welcomed the return of the link to earnings of the state pension. It must be a good thing, but there is still some suspicion about when it will occur. As others have said, the promise is rather vague. Will it be 2012 or might it be 2015, or will it just disappear into the ether and never occur? The Bill does not contain a firm commitment to the establishment of the link.
	We also need to know how average earnings will be calculated. We are told that it will be done by the Secretary of State, but how will he do that? Will a detailed system of calculation be laid down in some annexe to the Bill? After all, calculations of average earnings by different experts all come out different.

Mark Pritchard: Does my hon. Friend agree that in order for trust in the Government on pensions to be rebuilt, the pledge to restore the link must change from an aspiration to a commitment, with a defined timetable? In that way, people can know ahead of the general election whether it is real or just another empty and false Labour promise.

John Butterfill: My hon. Friend is right. It would reassure many people if we had more certainty on this issue. It would also reassure many people if the calculation of average earnings was done for the time being by some independent authority, rather than the Secretary of State. Otherwise, it would be open to future manipulation and we know that that has happened under Governments of all complexions. An independent calculation of average earnings would therefore reassure us all.
	The Government have been a bit timid on changing the state pension age. I said that when the White Paper was published and when Turner made the proposal. It would be possible to compress the timescale proposed in the Bill, so that the changes would happen earlier. I know that the Government have said that the equalisation of pension ages between men and women is dictating the timetable, but I disagree. It would be possible to compress the timetable and achieve considerable additional savings by so doing, which could provide cash to abolish some of the means- testing that people are so concerned about—especially the Liberal Democrats. Their solution seems to be, "Well, the Government spend lots of money on everything else, so why not spend lots of money on this?" Liberal Democrats are prone to saying that, but if we compressed the timetable, we could find some money to help in getting rid of means testing.
	The proposal is to wait until 2044 and 2046 to change retirement age to 68. Well, the US already has a retirement age of 67, as does Scandinavia. For us to wait almost another 40 years to make the change to 68 is very unambitious. If others can go faster, we should too, and there are great savings to be had by doing so. Indeed, with the improvements in medical science and the resulting increases in longevity, it may not be impossible to change the retirement age to 70.

John Penrose: My hon. Friend will of course be aware of the comments made by Lord Turner in his report to the effect that one has to give people a minimum length of time to complete the financial planning for their retirement. While it probably would be possible to compress the timescale in the way that he is describing, there is a cut-off point because after a certain stage in people's working life they cannot alter their financial plans that much. There might be some scope for compression, but there would be a limit to it.

John Butterfill: My hon. Friend is right, but the Government propose an extremely long timescale, which is much longer than that delivered in other countries. We should seek to be more ambitious than we are being at present.

Michael Weir: The hon. Gentleman mentions longevity, but does he accept that one problem is the disparity in longevity between areas? It was recognised by Lord Turner to some extent, when he suggested that pension credit should apply at age 60 for some groups. Does the hon. Gentleman see any solution to the problem, given that he proposes accelerating the change to retirement age?

John Butterfill: The hon. Gentleman is right to say that in parts of the United Kingdom, notably the one that he represents, longevity is not as good as it is elsewhere, but that is largely due to poorer health, with greater rates of smoking and unhealthy eating habits. Education is the major key to equalising longevity throughout the UK, because there is nothing inherently unhealthy about living in Scotland. Most medical opinion is of that view. However, I do understand that at present there are wide disparities.

Michael Weir: There are also massive disparities in England. The same problems found in parts of urban Scotland are also found in parts of England and Wales, for historical reasons. It will take a long time before those disparities disappear.

John Butterfill: I understand the hon. Gentleman's point, but the medical profession and improved education can help. It is not an insuperable problem and I am not sure that we should be prevented from doing something that would benefit the nation as a whole—including a high proportion of the hon. Gentleman's constituents—simply because of disparities in health outcomes.
	Pension credit is a difficult problem. Even on the Government's figures, one third of pensioners will still be claiming pension credit by 2050, and we need to do everything in our power to try to eliminate means- testing. It has a high administrative cost and we also need to restore dignity. Most of my constituents who claim benefit would much prefer not to have to do so and the elimination of means-tested benefits, wherever possible, should be an objective for both sides of the House. I have given one example of ways in which we might be able to save enough money to enable us to do that.
	The Minister will recall from my Adjournment debate on 2 November that I am delighted that the Government are making changes to the home responsibilities protection provision. The changes will be good for parents and carers, and 20 hours a week is a reasonable requirement. The Minister will remember from my Adjournment debate that I am concerned about how the 20 hours will be defined. Who will provide certification? In many cases, the time spent by carers is difficult to measure. Perhaps we should require a medical practitioner to say that a particular patient needs at least 20 hours of care, as that would be preferable to requiring carers to prove that they provide 20 hours of care.
	The system must not be too hard and fast, as hours of care often fall at different times of the week, according to the arrangements that families make for looking after sick and elderly relatives. Carers perform an enormous duty for their own kith and kin that greatly benefits the country as a whole, and we must make it as easy as possible for them to make a legitimate claim.

Sally Keeble: Does the hon. Gentleman agree that local authorities' social services departments could be asked to undertake the role that he describes if GPs were not willing to take it on or demanded substantial payment?

John Butterfill: The hon. Lady anticipates me, as I was about to say that social workers could undertake that role, although not to the exclusion of anyone else. For example, if a GP believed that the degree of care given to a person in the course of a week was reasonable and necessary, then his certificate to that effect should also be acceptable. Some people give up their whole lives to caring, and one can only admire what they do. They should not suffer from having a lower pension in the latter part of their lives as a result of the care that they have given.
	The change in national insurance contributions for those retiring before 6 April 2010 has been mentioned already. The current proposals for the reduction in qualifying years for those retiring after that date mean that the people who retire immediately before it will lose out considerably. It must be possible to construct some form of taper to remove that cliff edge: without it, an estimated 5 million women will suffer a very substantial diminution in their income for the rest of their lives. It should not be beyond the wit of the Government, in consultation with all other parties, to come up with a mechanism to deal with the problem.
	In conclusion, this is a good Bill. An enormous amount of thought has gone into it, and I wish it Godspeed.

Anne Begg: I want to add my voice to the general consensus in support of the Bill. I am sure that that includes the Liberal Democrats, although they sometimes say one thing and then do something completely different. However, I am willing to believe the warm words uttered by the hon. Member for Yeovil (Mr. Laws), and that his party will support the Bill later tonight.
	Consensus is important for a Bill like this. We get the chance to re-engineer the architecture of the entire pension system, in a way that covers both state provision and private occupational pensions, perhaps once every 50 years, so we must make sure that we get it right. Some changes will be inevitable as the years go by, but I hope that the solution offered by this Bill, and by the subsequent legislation to introduce personal accounts, will remain fundamentally unchanged for a long time, so that future pensioners get a fair and equal settlement.
	I have been a member of the Work and Pensions Committee for six years, and it has been interesting to see how the emphasis in the pensions debate has shifted. In the early days, that debate was all about how to deal with existing pensioners, but in the past few years we have begun to think about what we can do for tomorrow's pensioners.
	Although it would probably not be true to say that the question of pensions is on everyone's lips, the subject used to be a matter for older people only. Now, younger people are talking about the provision that they will have to make for their later years. They may not yet understand what they will have to do, or be ready to make the necessary contribution to ensure an income in later life, but they are starting to consider their pension provision. I hope that the introduction of the national pension saving scheme and the personal account will give younger people an incentive, for the first time, to put money aside for later in their lives.

Lorely Burt: I totally agree with the hon. Lady that it is very important to get younger people to consider their future and their pensions. However, does she regret that the Bill will do nothing for existing pensioners, 3 million of whom will be dead before they gain any discernible advantage from the changes being introduced?

Anne Begg: Not every Bill does everything for everybody. This Bill is about tomorrow's pensioners, and was never intended to be about today's. As it turns out, greater longevity means that it will affect today's pensioners, as some of them will still be alive to benefit from its provisions.
	I am pleased to say that the Bill will be of particular benefit to women, and that is what I want to concentrate my remarks on, but women who have retired already believe that the introduction of the pensions credit has been a great help. The Government have come a long way since the election in 1997, when they inherited an enormous problem of pensioner poverty. Only 10 short years ago, pensioners were dying from a lack of food and heat in the winter. Then, being a pensioner very often meant living in poverty: now, pensioners—or old people as a whole—are no more likely to live in poverty than members of the general population. That is a remarkable turnaround, and shows what a huge effect the shift in public policy has had.
	That shift began with the introduction of the pension credit. I make no apology for the element of means-testing involved, nor for the steps that the Government took in introducing it, as the policy was absolutely correct. My hon. Friend the Member for Northampton, North (Ms Keeble) was right to say that increasing the basic state pension or restoring the link with earnings would have had no impact on the poorest pensioners, or on the 1.5 million women who did not qualify for the basic state pension.
	Urgent action needed to be taken, and that is what the Government did in the years immediately after 1997. The pension credit lifted 2 million pensioners out of absolute poverty and more than 1 million out of relative poverty, and the Government now have a breathing space. They are therefore able to look at tomorrow's pensioners, including those women who have yet to retire, to see what needs to be put in place so that they can benefit from the basic state pension. That is what the Bill is about—making sure that more and more women will qualify for the basic state pension when they retire. The Government have chosen to achieve that aim by reducing the number of years needed for eligibility for the basic state pension and by changing the qualifications, especially for carers.
	The hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Bournemouth, West (Sir John Butterfill) both talked about the cliff edge for national insurance contributions in 2020, when, depending on a woman's age, she could be just one day short of benefiting from the 30-year contribution period. Both cited the number of women who would be affected by the change, but that is not necessarily the number who will be disadvantaged by it. The figures do not take into account the fact that a large number of those women will already be receiving pension credit, so the level of the basic state pension or its contributory elements will not matter; almost all their pension will be made up by pension credit. None the less, I urge the Government to look into some form of smoothing mechanism, to make sure that the cliff edge is not so absolute. However, I accept that there has to be one at some stage; there has to be a specific day when the qualifications change.
	I had planned to speak about the more generous carer's credit, but my hon. Friend the Member for Northampton, North went into detail about the definition of a carer in her speech. She set out how a carer could qualify for credits towards contributions to the basic state pension. However, I urge the Government to consider how different caring roles can add up to the 20 hours a week set as the threshold. Eligibility should not be dependent on only one job; for example, women of my age who have looked after their children may have gone back to work but dropped out again in their 50s to look after grandchildren and an elderly relative. The individual elements of such care might not add up to 20 hours, but in combination they could easily do so.
	The hon. Member for Bournemouth, West suggests that GPs should make judgments about care for people with disabilities or ill health. I have to disagree: GPs are not qualified to make judgments about the amount of care an individual needs. They can determine whether someone is ill and what medical care they need, but I do not think they would welcome having to make judgments about social or personal care; it is not in their remit. I say that as someone with a disability. Just because a doctor may be able to diagnose my condition, they do not necessarily understand its effects on how I live my day-to-day life. Putting such matters into the hands of GPs makes them medical rather than social judgments.

John Butterfill: Of course I understand that a wide range of people could make such decisions; I merely suggest that GPs could be one of them. I am reinforced in that view by a case that I discussed with the Minister in November, in which the GP was prepared to put in writing his view that the patient needed at least a certain quantity of care over a week. There will be variations from case to case, but in some cases a degree of medical knowledge, which a social worker might not have, would be essential in evaluating the situation. We need a range of expertise.

Anne Begg: Indeed, and we need to ask GPs if they would be willing to take on that role. The Government should not land things on various professionals without asking their opinion; they need to be engaged in the debate.
	Everything in the Bill that makes it easier for women to build up their national insurance credits is to be welcomed. As those provisions are implemented, and more and more women begin to qualify, it will make sense to restore the earnings link to the basic state pension. I regret not that we did not restore the link, but that the pensions debate has been sidelined into that narrow category. It made for an easy slogan, but there was not always full understanding of what restoring the link meant. When I spoke to pensioner groups, I discovered that they had different interpretations. Some, like the Government, thought it meant restoring the annual upgrading to match the annual increase in earnings. However, some pensioners thought it meant making sure that the basic state pension was a percentile of the average wage, while others thought it meant they would receive backdated payments amounting to what would have been paid in the annual uprating from the date when the link was broken to the day it was restored.
	Those who were crying—a very Scottish word that means "call"—for the restoration of the link may not all have been calling for exactly the same thing. The Government should make it possible for almost everyone to qualify for the basic state pension. The contribution need not be monetary, as it obviously is in the national insurance scheme; it could be social, based on the time people have given in their caring role. The wider the Government can spread the net, to ensure that as many people as possible qualify for national insurance credits, the wider the coverage of the basic state pension and the more sense it will make to restore the link. Before we even consider restoring the link, we have to make sure that it is as easy for women to qualify for the basic state pension as it was, in general, for men; otherwise we shall merely have expanded the inequalities inherent in the existing system.
	I urge the Government to go slightly further than the Bill proposes—I hope that the Liberal Democrats will be pleased with my suggestion. The hon. Member for Yeovil was correct to say that I would have preferred a universal pension. That would be the ideal, but I accept the reason why the Government have not, in the short term, used residency to determine who should qualify for the basic state pension. There are difficulties in defining who is resident because the data have not been collected. It will take some years to build up the database, so it is more sensible to adopt the proposal in the Bill and reduce to 30 the number of qualifying years for the basic state pension. That will achieve the same outcome, but much more quickly.
	Perhaps to the disappointment of the hon. Member for Yeovil, the universal pension that I envisage would be at the basic state pension level. We need a means of getting the necessary coverage so that everybody who has lived in the UK for 15 or 20 years will receive the basic state pension. The Liberal Democrats and the Scottish National party propose a citizen's pension, but it is unaffordable as it is tied into somehow—I am not sure exactly how they are going to do it—eliminating means-testing.
	I thought that I understood the citizen's pension until I heard today's debate. I had thought that it would be set at a sufficiently high level to minimise, although not eliminate, means-testing and that the qualification would be based on residency. If that were the case, those who had previously paid national insurance contributions in the UK, but now lived abroad, would qualify for the citizen's pension. However, the hon. Member for Yeovil said that they would not, so I do not know whether the citizen's pension is based on residence or contributions or what. It cannot be both, so we need to be much clearer about what it would be based on.

Michael Weir: rose—

David Laws: rose—

Anne Begg: I will give way in a few moments.
	I understand why the Government went down the road that they did. On the political front, the people who would benefit from a citizen's pension are campaigning for it at the moment, but if we were proposing that those who had contributed through national insurance would benefit from it, they would now be campaigning on the basis that they had paid all that money so why should those who had paid nothing receive the same as them? On the basis of equity, the debate would have changed. As I said, I understand the political reasons behind the Government's maintenance of the contributory principle. A great deal of work remains to be done to change people's perceptions or feelings about the fairest way of operating a state pension system—that people should get something for something.

David Laws: To clarify the issue, does the hon. Lady understand that what the residence criterion means for the citizen's pension is that the number of years of residence in a country rather than national insurance contributions provide entitlement? That is totally different from being resident in a country at the time when the pensions are paid.

Anne Begg: I still do not know how many years are involved, so perhaps the hon. Member for Yeovil will intervene again to clarify whether it is 10, 15 or 20 years. If it is 10 years, it means that anyone who has lived in Britain for 10 years and then moves anywhere else in the world will qualify for a full citizen's pension in the UK—even though they spent only 10 years living here and are no longer living here.

Lynne Jones: However, if they had been working, they would have paid national insurance contributions for their 10 years of residence, so I do not understand why it is so substantially different. It was, after all, Turner whose preferred solution was a citizen's pension. Many others who have contributed resent the fact that people who have made no contribution in national insurance are still eligible, if they have no other benefits, for the means-tested benefits—and often at a higher rate.

Anne Begg: So what of a married woman who has run off with some American toy boy and has never paid national insurance contributions? Just because someone is resident in the country does not mean that they are paying national insurance contributions, so we are back to the same problem. Part of the reason for the Bill is that not everyone was qualifying under the contributory principle. What Lord Turner proposed was not the citizen's pension as devised by the other political parties, but one as an element of a universal pension. It was not based on the contributory principle. The two are different.
	Let me return to my earlier point: as we expand the net of qualification under the contributory principle through national insurance contributions—or, indeed, through credits, which should satisfy my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones)—it may become sensible in future for residence to become an easier means of identifying those who should receive a basic state pension. At the moment, that is not possible and it will continue not to be possible in future unless at some stage the Government begin to collect the data that would allow people to prove their residency. If that were part of the Bill, it would allow future Governments to decide whether to change the basis in years to come—without having to redesign the architecture of the basic state pension.
	If we are talking about a pensions system that will last well into the century and for the next 50 years, it may make sense to give future Governments the flexibility to make that choice if they so want. I urge the Government to look further into that.  [Interruption.] I am pleased to hear the agreement of the hon. Member for Yeovil about that; it may be one of the few things that we agree on. My proposals are practical, but unfortunately the introduction through the Bill of the citizen's pension tomorrow would not be possible and I accept the Government's reasons why it would not.
	I have spoken much longer than I intended to. My final point is a matter of concern to me, which is why I tried to intervene on the hon. Member for Bournemouth, West. The hon. Member for Angus (Mr. Weir) has already put forward the arguments that I would have made if I had been able to intervene. I had serious concerns about the raising of the state retirement age. It may be because I was born in 1955 and, as a female, will be the first of my generation not to receive her state pension until she is 65. Perhaps that concentrated my mind. I suspect that the hon. Member for Bournemouth, West is slightly older, so perhaps that is why he suggested raising the retirement age much sooner. It may be easier, as it will not apply to him or his generation.
	I had serious concerns, as do a number of the trade unions, about the raising of the state retirement age simply because of the different demographics throughout the country. Where many men have worked in heavy industry and lived in the most industrialised parts of the country—Glasgow is a good example—the average life expectancy can be as low as 59. People die before they even reach the current state retirement age. I have to say that that is not just a matter of geography or education, but more a consequence of poverty. Unless the Government can ensure that the next generations do not live in poverty—the Government's avowed aim to lift children out of poverty by 2020 is crucial—the children born in poverty today will not enjoy the same longevity as those born to middle class parents. We must ensure that we lift those children out of poverty so that they can live as long as their more affluent neighbours—and the job has to start now.
	The package of proposals from Lord Turner included the raising of the state retirement age, and part of building a consensus is that individuals involved in the process have to accept some things that they like less than others as part of that overall package. That is what consensus building is all about—recognition that some parts of the population do not like certain aspects, but they should nevertheless agree to them if they are acceptable and will work for the vast majority of the population. I have thus swallowed my objections to raising the state retirement age, though the long lead-in time is absolutely right and it is dependent on the Government getting their public health policies and their anti-poverty strategy right. It will affect only people younger than 47, who will have the chance to enjoy the same benefits after retirement as everyone else.
	I have taken up quite a long time. I welcome the Bill and I look forward to the following Bill on personal accounts. I raised the issue of the trivial commutation level with Secretary of State. Getting that level right will be important in answering some of the concerns that the Liberal Democrats have expressed about whether it will always be right to save and whether there will be some—again they will predominantly be women—who may not benefit because they have small amounts of saving. If we get the trivial commutation level right, being able to take a lump sum, without affecting means-tested benefits, would help to answer some of the questions. This is a good Bill and I am delighted about the change that it will make in the lives of women. They will be able to contribute to, and will qualify for, a basic state pension and they can look forward to a level of income that means that they will be able to enjoy their old age and the years that they have to live beyond retirement age.

Quentin Davies: I congratulate my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) on an excellent and thoughtful speech. It showed, not surprisingly, that he has a considerable grasp of the subject. He showed good sense in accepting formally on behalf of my party the Government's pension credit system, which I think we should accept. However, in all frankness there was one matter on which he did not convince me and I want to touch on it briefly. It is quite useful for these matters to be discussed in public in time to influence the second Bill—the personal accounts Bill.
	The matter is that of the limit on contributions to personal accounts when they come in. My hon. Friend said that the Government were wrong to have a limit of £5,000 and that we should have a limit of £3,000—if I caught what he said correctly. I cannot see why we need a limit at all. The object of the operation is to encourage people to save and to maximise general savings and particularly long-term savings—savings designed to produce an income in retirement. It therefore seems to me that if anybody, whatever their circumstances or level of income, finds that when personal accounts come in they are the right vehicle for them and are a better deal all things considered—including the lower fees that we have been promised, which are an important aspect of the return available on any investment—I see no reason why that person should not come in with any amount of money, whether it is £3,000, £5,000 or £10,000 a year, if they want to and can afford that. We do not have running Revenue limits any longer; we have one global lifetime limit from the Revenue. That means that there is no reason on those grounds to have a running limit. No doubt we shall have to come back to that matter when the second Bill is introduced. I hope that we have some debate in advance of that Bill being drafted, because I am not sure that either my hon. Friend or the Government are on the right lines in thinking in terms of limits.
	I feel strongly that when we are designing a national public service such as a pensions system for the future, the House should not be in the business of taking into account the interests of a particular industry. We are not in the business of designing a pensions system for the future to suit the pensions industry. The pensions industry does a tremendous job and I have no reason to say anything against it as a whole. It is a large industry and includes independent financial advisers, pension funds, actuaries and so on and so forth. However, I do not accept that a limit should be imposed on the maximum contributions that can be made to a personal account simply because of the danger that, if there were no limit, undue competition would be created for other parts of the pensions sector. The creation of competition is a benign and good thing and should not be artificially restricted.
	There are many welcome things in the Bill and I agree with much of what has already been said on the subject. There is one thing that I regret, although it may be a bit late to alter it. There are a couple of things that could be, and should be, changed, and I trust that that will happen in Committee. There is also one overshadowing problem that the Bill does not recognise and I want to dwell on that at slightly greater length.
	I regret that we are taking so long to restore the earnings link. It was rightly said by a Scottish nationalist earlier that we are not actually restoring the earnings link—we are not restoring anything, because the system that prevailed until 1981 was a link to earnings or prices, whichever was the higher rate of increase. There was no choice about it. We are not restoring that; we are creating a new system, which for the first time is an earnings-linked system. That point aside, it seems a great pity, largely for reasons that have already been mentioned, that we cannot bring forward the introduction of that new system. The people whose interests the House ought to be most attached to—the oldest people of all; the world war two generation—are most unlikely to benefit if the earnings links does not come in until 2012 or even 2015.
	I recognise that we must maintain the fiscal viability of any measure that we pass through the House. I would be in favour of bringing forward the increase in the retirement age. I am in favour of bringing forward a rise from 65 to 66 perhaps in the next year or two, and then bringing forward a rise to 67 much more rapidly than the Government envisage. As several people have said, there are other countries—I would add Germany to the list already mentioned by my hon. Friend the Member for Bournemouth, West (Sir John Butterfill)—that already have a pension age of 67. I see nothing shocking about that. The Government have missed an opportunity—they could have done both things in a way that would be acceptable to the Chancellor, who I know is an overbearing presence on the Department for Work and Pensions. They seem to have missed that trick.
	There are two more minor matters that I hope can be addressed in Committee. This is an obvious case of where we should just polish the existing text. There have been calls for that already from both sides of the House. I am sure that the Government, who are in a reasonable, consensus-seeking mode, will have taken account of them. However, one issue is the moment of introduction of the earnings link and, later on, the moments of introduction of the new retirement age, which will increase from 65 to 66 and 66 to 67 and so forth. As things stand, appalling unfairness will be created. The other issue, which is important, is the introduction of a new system under which 30 years of contributions will qualify for a full pension, rather than 44 and 39 years, which is the rule at present. The Government propose to go in one jump, on one day—6 April 2010—from requiring 44 years, or 39 years in the case of women, to 30 years. As has already been said, somebody who is 65 on 5 April 2010 will find that he or she has a pension that is considerably less than somebody who happens to have been born a day later and becomes 65 on 6 April 2010. If someone loses out on roughly a third—that would be the gap between 30 years and 44 years—of his total pension entitlement, which is about £84 at present, that would mean that he was losing about £27 or £28 a week simply by virtue of being born on one day rather than another. That cannot be right. Similar unfairness and anomalies will be created when the new retirement ages come in if the whole of the disbenefit is suffered on one particular day.
	The Government seem to have forgotten entirely about the concept of a taper. Whenever we make changes to the tax or benefit systems that have a significant, long-term effect on people's earnings, they should be phased in or tapered, simply out of sheer humanity. That would be the way to pre-empt the great sense of injustice that will otherwise pollute the new regime from the very moment of its introduction, which would be a great pity. I do not know whether I will be lucky enough to be selected to serve on the Public Bill Committee. If I am, and if no one else proposes an amendment along the lines that I have suggested, I will do so myself. However, I trust that the Government will propose such an amendment to deal with the problem.
	My main worry is the overarching problem with which the Bill does not deal, namely, means-testing. There is no question at all that in the present circumstances, and in the circumstances that can be foreseen when the Bill reaches the statute book, there will be a large number of people who will have no motivation to make a voluntary pension contribution by way of a personal account or any other means.
	Way back in the 1997 Parliament, when the Government first introduced the minimum income guarantee, which was the predecessor of the pension credit system, I happened to be my party's spokesman on pensions. At that time, I made the calculation—I think that that was the first time that it had ever been made, and it appeared in the following day or two in not just the specialised press, but the general press—that a person would need to save for a capital sum on retirement of £80,000, on the values of that day, to gain even one penny's benefit from those savings from a modest income. At the time, £80,000 would have yielded an income of £5,000 a year on a 6 per cent. annuity, and £5,000, on the assumptions that I set out to the House—no one quarrelled with them—was the average value of the benefits that could be received in addition to the maximum state retirement pension, particularly housing benefit, council tax relief and the minimum income guarantee supplement. On the assumption that the person concerned had a full contributions record, I calculated that all the £5,000-a-year annuity benefit would be completely forgone because it would equal the amount of means-tested benefit available to that person.
	Things have moved on since I made my calculation. The pension credit is worth more than the minimum income guarantee was at that time, and rents, and thus housing benefit, are somewhat higher. The relevant figure in the calculation is now certainly more than £100,000. A person would have to save more than £100,000 for there to be any benefit on retirement from those savings, if he or she was on a low income and otherwise eligible for means-tested benefits. That is a horrifying thought because to save an amount yielding a capital sum of £100,000 at the age of 65 would represent a pretty heroic savings effort for someone on a small income.

Anne Begg: The figure that the hon. Gentleman cites was considered by the Work and Pensions Committee in the last Parliament. The Minister for Pensions Reform and the hon. Member for South-West Bedfordshire (Andrew Selous), who is sitting on the Opposition Front Bench, were members of that Committee, so they will remember that we queried whether the £80,000 figure was correct. The hon. Member for Grantham and Stamford (Mr. Davies) failed to include in his calculation that someone who had managed to pay £80,000 into a fund that could be put into an annuity would have paid national insurance contributions, meaning that he or she would receive the basic state pension. The £5,000 would thus have been received on top of that pension and the person would not have lost pound for pound as a result of the pension credit. The figure of £80,000 was relevant only if a person had no other income whatsoever and qualified for the full amount of pension credit. The calculation—

Mr. Deputy Speaker: Order. I think that the hon. Lady has had more than her two-penn'orth today. That was probably sufficient by way of an intervention.

Quentin Davies: The hon. Lady misunderstands my logic and what I am trying to say. She certainly misunderstood what I said when I first made the point about eight years ago. I am comparing like with like—I am comparing comparables. For the purposes of my calculation, I am assuming that someone has a full contribution record and thus receives the state retirement pension. The question is whether that person will get anything more than that pension.
	The figures have changed a bit since I first made my calculation, although not by much. At that time, the minimum income guarantee would have provided £20 a week more than the state retirement pension. Housing benefit typically would have provided about £50 a week, although now the figure would be £60 or £70. On top of that, council tax relief would have provided perhaps £10 a week, although the amount would now be £20 a week because of the dramatic rise in council tax since then. People at that time would thus have been entitled to some £5,000 a year by way of means-tested benefits on top of their state retirement pension, because, as I am sure that the hon. Member for Aberdeen, South (Miss Begg) knows, if people have only their state retirement pension to live on, they automatically get council tax relief, housing benefit and the minimum income guarantee—now the pension credit. All that benefit would be forgone by people who had some £5,000 of retirement annuity on top of their state retirement pension.
	If one does the calculation today, the figure is rather higher, given that the value of the benefits has increased, so the capital sum needed from which to purchase an annuity on retirement would now be more than £100,000. If, after cashing in a capital sum of £100,000, a person had £6,000 from a retirement annuity as their only income in retirement, apart from the state retirement pension, they would find that they had wasted the whole £100,000, because the £6,000 that would be received would disqualify them from the means-tested benefits that they would otherwise get. There is thus a break-even point, which is now slightly more than £100,000, at which savings give absolutely no return.
	I ask the hon. Member for Aberdeen, South not only to follow that logic, but to bear with me and go to the next stage. A person who had saved £200,000 would receive a return from that by way of an annuity that would be exactly half what the market return would be. In other words, that person would receive half what the market would regard as a reasonable return for deferring consumption throughout a lifetime and undergoing an investment risk by saving money. It is not unless a person expects to be able to accumulate an amount considerably in excess of £200,000 in a retirement fund with which to purchase an annuity on retirement that it becomes worth while to think about making personal pension contributions.
	I am afraid that that is the overshadowing reality, and it means that someone who does not expect to be able to save that kind of money would almost certainly be much better off consuming their income—spending it on enjoying their life and doing what they want to do—rather than saving it, because they will know that when they reach 65 they will get not only a full state retirement pension, but the full pension credit, in addition to housing benefit, council tax relief and the other means-tested benefits to which they may be entitled. Such an uncomfortable reality means that anyone giving honest advice to a person in such circumstances would have to say, "How much do you expect to be able to save in your lifetime? If you can't save beyond £200,000, it really isn't worth it."
	Just imagine the effort required for someone with an income of under £20,000 a year, or even £25,000 a year, to save a sum that would, on reasonable rates of return, amount to £200,000, £250,000 or more on retirement. It would be an heroic effort, and that heroic effort would almost certainly yield a derisory return. People who earn much more substantial amounts of money might be able to put aside £5,000, £10,000 or £15,000 a year, and for them it is very worth while to save that money, but unfortunately it is not worth while for others to do so in present circumstances, and the Government have hardly changed that at all. We must all be concerned about that.
	The Liberal Democrats identified that problem and have come up with a solution that everybody else regards as simply not financially viable, and I share that view. Their solution is not realistic; it is funny money, and it is not a sensible way of moving forward. We must be able to afford what we propose for the British public. An alternative used elsewhere is compulsion. The hon. Member for Northampton, North (Ms Keeble) mentioned the Australian superannuation system, which I have considered, and it is an attractive system that runs extremely well. Compulsion means the state telling everybody that they will have to pay for what they receive in retirement. No doubt there is a means-tested safety net, so that people do not die in the gutter if, for one reason or another, they manage to avoid saving any money through the compulsory scheme. Nevertheless, in such a system, what people receive on retirement is seen to be the direct result of the compulsory saving. That, of course, was the original basis of the Lloyd George proposal introduced in the House exactly 98 years ago. Compulsion has not been mentioned at all in today's debate, although just about every other aspect of the subject has been. It is something to which we will almost certainly have to return.
	There are great problems with compulsion. People will say, "I'm compelled by the state to save; the state is forcibly extracting a certain amount of money from my salary. Even though it is supposedly being saved for my benefit, I regard it as a tax. It is an imposition and it is not voluntary." I quite understand the political sensitivity of the matter. It would be a brave Government who decided to introduce compulsion, but I do not think that we should exclude the idea. I am not urging my hon. Friends to include the proposal in our next manifesto, but we should not exclude the idea from the debate, just as it has been excluded, slightly artificially, from our otherwise detailed and multifaceted discussion this evening.
	Several hon. Members  rose—

Mr. Deputy Speaker: Order. Before I call the next speaker, I point out that the Front-Benchers' speeches were very long, and so far only one speech by a Back-Bencher has taken less than 20 minutes. If all hon. Members are to contribute, speeches will have to be considerably briefer. I call Mrs. Janet Dean.

Janet Dean: I promise to be brief; otherwise my voice might give out. I greatly welcome the Bill, particularly the measures that will benefit women and carers. The reduction of the number of qualifying years to 30, and the introduction of weekly credits in place of the current home responsibilities protection, will increase the percentage of women who will be entitled to a full basic state pension. Of course, we should recognise that home responsibilities protection already brings benefits to many women, even though it is more restrictive than the proposed credit system. However, I will raise one problem with HRP that I hope will be avoided under the new credit system, and I hope that Ministers will consider how those affected by the problem can be helped.
	In August 2005, I was contacted by my constituents, Mr. and Mrs. Cartwright, who discovered when Mrs. Cartwright received a state pension forecast that she had not been awarded home responsibilities protection. When my constituents questioned that, they discovered that their child benefit, which they had claimed since 1984, was deemed to have been paid to Mr. Cartwright, even though it was paid into their joint bank account. When they applied for child benefit, Mr. Cartwright's name was put first on the application form, for no reason other than that his name appeared first on the bank account. He was therefore treated as the recipient of child benefit, and that qualified him for HRP. I believe that that may be a significant problem now that child benefit is paid into bank accounts. It would never have arisen under the old system of payment books, in which it was clear that it was the mother who received the benefit.
	Mr. and Mrs. Cartwright should have received form CH718 for Mrs. Cartwright to complete, which would allow her to give her permission for Mr. Cartwright to receive child benefit and therefore the HRP. My constituents do not believe that they ever received that form, and the Child Benefit Office is unable to provide copies of returned forms. The onus is on the claimant to prove that they never received the forms, which is impossible after 20 years. There seems to be confusion on that point. My recent inquiries revealed that the rule is that if no completed CH718 form is received, the claim from the husband should be disallowed. However, while making representations in 2005, a member of my staff was told that although the forms are sent out, if they are not returned, it is assumed that the claimant received them, and that the first named person on the form is accepted.
	Whatever happened regarding the form more than 20 years ago, it is clear that no one would knowingly waive their right to home responsibilities protection when they had been caring for their children and not working. My constituents were certainly not aware of the implication of putting the husband's name on the claim form and the effect on the entitlement to HRP. It is difficult to find out how many people may be affected by the problem, and it is probably only when people draw close to retirement age and receive a pension forecast that we will know the true extent of the problem. Certainly, both my assistant and my constituents have been told by the National Insurance Contributions Office that it knows of many such complaints.
	The Pensions Advisory Service produced a document entitled "Report on Women and Pensions Helpline", which was the result of a pilot helpline available from 18 October to 10 December 2004. The report states:
	"A recurring comment from many callers was that they were unaware of, or confused by, HRP and how it may apply to them. Particularly relevant for couples, is the fact that HRP is only automatic when the child benefit is being paid to the non-working partner. Some enquiries came from individuals where the child benefit was being paid to the working partner rather than the partner who had given up work or was working reduced hours to look after the couple's children. We were able to advise why they should be changing the payee details for the child benefit."
	I recently contacted the Pensions Advisory Service and was told that about 500 calls to the helpline concerned the subject of HRP, and the main problem was lack of understanding of how the system works. The issue highlighted in the report of the "wrong" partner receiving child benefit mainly concerned cases in which men stayed at home to care for the children, and due to ignorance of how the system works, their child benefit was paid to the mother, even though she was the working partner. As a result, the stay-at-home husband did not qualify for HRP.
	Whether it is fathers losing out on HRP because they stay at home to care for their children, or mothers such as Mrs. Cartwright missing out because the husband's name was inadvertently put on the form first, the situation is clearly ridiculous. No one would willingly lose some £32 per week in pension entitlement. In such cases, it should be reasonably easy to establish that the working parent has paid tax and national insurance during the years in which they were eligible for HRP, whereas their partner has not. It would therefore seem possible to transfer the right to HRP in those circumstances.
	I am grateful to my hon. Friend the Minister for Pensions Reform for meeting me to discuss my constituents' case. I hope that amendments to the Bill will be considered, so that we can address the problem that affected Mr. and Mrs. Cartwright and, I believe, many more people throughout the country.

Michael Penning: I shall not waste 48 minutes of the House's time, which is what the hon. Member for Yeovil (Mr. Laws) did. He lambasted the Bill, only to say that he would support it. I, too, support it, and it would have been much easier if he had said that he was going to do so at the start of his speech instead of waffling for 48 minutes.
	I welcome many of the Bill's proposals, and many of today's contributions have sensibly identified things that need a little tweaking in Committee and at later stages in proceedings. I was interested in what the hon. Member for Northampton, North (Ms Keeble) said about the changes that the Bill will bring about, particularly for women and carers. I am a new Member, so this is the first opportunity that I have had to debate the subject, but it is a scandal that women have been treated as second-class citizens in pension entitlement for many years. I was shocked to read a letter from the Office of the Pensions Advisory Service to my mother, who sadly divorced late in life. She had worked throughout her life and, at the beginning of her career, she signed a document and received the married woman's stamp. She did not realise, however, that she was signing her rights away if her marriage did not last until she reached pensionable age. She is lucky, and she would be happy for me to tell the House that she has been swept off her feet by a wonderful younger man—he is two years her junior—who provides her with the financial security that she deserves. They live in Spain, but she had to endure a degrading experience. She worked all her life and paid her stamp, so it is morally wrong that payment of her pension depended on whether her husband was in work and whether the marriage lasted. The Bill addresses many of the problems experienced by that generation.
	The Bill addresses, too, many problems experienced by carers, whom we have all met in our constituency surgeries and during the course of our duties. Their work, dedication and love is flabbergasting, and that applies not just to part-time paid carers but to people who are looking after loved ones at home. I am worried about the problems that carers and workers in other industries may experience if the retirement age is raised to 70, and if the Minister does not have time to deal with my concerns tonight, I am happy for him to write to me.
	Carers try hard to do everything for their loved ones. They often lift their loved ones when they are not really strong enough to do so, as they hate to ask for help. We must provide that help, but I have visited many carers who try to do everything that they possibly can long after they are physically capable of doing so. I am concerned that carers will be asked to look after their loved ones until they are 60, 65 or 70, although they may not be physically capable of doing so. What back-up mechanisms are there? Hon. Members will know that, all too often, social services do not ask, "How much time can we give?" but "How little time can we give?"
	One of my constituents is confined to a wheelchair, and suffers from Parkinson's and an extremely debilitating form of motor neurone disease. He is allowed 10 minutes' help in the morning to get up, dressed and washed and 10 minutes' help in the evening. He used to receive 20 minutes' help and, before that, 30 minutes, but because of financial pressures on social services that period was reduced.
	I agree that we need to ask for advice from people such as GPs. The hon. Member for Aberdeen, South (Miss Begg) said that GPs will not be interested in doing extra work, but I think that they will be if they are paid for it. If they are not paid, they will not do it, as that is part of their contract.
	I am concerned about other workers who will be expected to work until they are nearly 70. I come from a family of construction workers, and I have seen generations of workers do heavy work on construction sites, particularly groundwork. Gentlemen cannot physically do that work once they are in their 60s, and it is degrading for them to be asked to make the tea or undertake other duties on site. They are skilled workers, but their speciality is heavy work, and they cannot go on working in the construction industry until they are 70. I do not know what modelling the Government have done on the opportunities for those workers between the ages of 65 and 70 because, in most cases, they will not be able to carry on working on construction sites. It is important, however, that we do not expect them to undertake degrading duties.

Mark Pritchard: Someone aged 50 or 60 in a construction job may rightly think that they cannot continue to undertake heavy manual labour until they are 70, so they will try to retrain. However, as a result of the Government's cuts in further and higher education funding for elderly people, they cannot do so, and thus cannot escape the trap highlighted by my hon. Friend.

Michael Penning: My hon. Friend makes a valid point. There is a difference between longevity—we all know that people are living much longer—and physical capability and ailments that prevent someone from working. I am almost 50 and—perhaps because I was part of the Airborne and because I was a fireman—I am starting to suffer from arthritis. If I was doing a physical job in the construction industry and my condition worsened, I would not be able to carry on. I would be faced with a decision. Would the doctor sign me off, because I was not physically capable of doing my job? Would I attempt to retrain or would I take a job stacking shelves? All those options need to be modelled by the Government if we wish to extend the retirement age—and I accept the reasons for doing so—as that extension is not just about the age at which people die but whether they are fit and capable of working. We must not subject them to degrading treatment as they grow older.
	The hon. Member for Northampton, North raised the important issue of the disability living allowance, payment of which stops as soon as the claimant reaches retirement age. DLA entitles most people to a mobility vehicle, so if we extend the retirement age to 70, we must make sure that we extend DLA, too. All the benefits that stop at 65 for a DLA claimant should continue to 70. We could even consider extending DLA into retirement, because someone who has had a mobility vehicle for many years has come to rely on it to get out of the house and remain active. As soon as they retire, however, that entitlement stops.

Anne Begg: If someone is awarded DLA before the retirement age they keep it after retirement, but if they do not qualify before retirement age, they cannot receive it once they retire. The only thing that they can receive is attendance allowance.

Michael Penning: That is right, but the position is confusing. I have dealt with constituents in my surgery who have suffered as a result of mistakes in DLA.
	The Minister would not expect me to make a speech about occupational pensions without mentioning the theft of pensions from 65,000 pensioners, not least the 700 former Dexion workers in my constituency. That is important to this debate, because it is about trust. The Government have made a huge assumption that many people will open a personal account or a private scheme, to which they will be expected to contribute. Less than 50 per cent. of working people pay into a pension scheme, and 80 per cent. of the schemes set up by companies are shells—nothing goes into them at all. If we do not address the issue of trust and the need for people to be sure that their money is safe, if we do not apply to Government advice the criteria that we apply to advice from a financial adviser, as both are covered by the same legislation, if we do not convince the public that their pension will be safe, if the Government do not accept the ombudsman's report on maladministration, people such as my constituents, Mr. Peter Humphrey and the widow of David Cheshire, will demonstrate, and reports will appear in the press. They will not go away, as they will go on fighting for their rights, which will destroy the Government's credibility and their efforts to sell personal accounts throughout the country.
	The Government assume that many people will open a personal account, but the simplest way forward is to accept the ombudsman's report on maladministration. I was working in a different capacity at the time, but I accept that my party made mistakes. The Government must accept that they, too, have made mistakes, so that confidence in pensions can be rebuilt.
	If one talks to the younger generation—I am nearly 50, so I am getting on—it is clear that they are not investing in pensions. They are not putting money away for a rainy day. That is partly because, as we heard earlier, if they are on a low income, they have to put so much away in order to beat means-testing for benefits. That is a difficult situation, but the biggest problem is trust. No one trusts pensions enough to put their future into them. The Government could do so much for the Bill, which is an excellent Bill, if they accepted that they made a mistake, and compensated properly those whose pensions were stolen from them. Then we could start afresh and restore confidence in pensions. Hopefully, the Bill could regenerate the entire pensions industry.

Judy Mallaber: For too long, women have had a raw deal from the pensions system, which may explain why women have been out in force on the Government side during the debate. Only a third of women retire with a full state pension. One in five single women pensioners risk being in poverty in retirement.
	Yesterday, when I went to the relaunch of the British Heart Foundation shop in Alfreton in my constituency, there was a murmur of great approval from the older women volunteers when I said that I intended to speak about women and pensions in the House today. It resonates with women that the issue must be sorted out.
	Women must be at the heart of pensions review and reform. If we get it right for women, we will get it right for everyone else as well. I make no apology for going on about women again, or for repeating my request to those on the Front Bench to reconsider the proposals to re-examine the position of part-time women workers and the definition of carers. I repeat the pleas of my colleagues on those matters.
	I am proud to support the Bill. My right hon. Friend the Secretary of State pointed out that it is the biggest reform of our pensions since Clement Attlee's post-war Labour Government implemented the Beveridge report. It has not been spelled out, but it is obvious that those reforms were based on a traditional model of a one-earner family, in which the man was the breadwinner, with a steady job for life, who financially supported his wife, who in turn carried out her family responsibilities without any financial recognition for her contribution to society. After the second world war, women were sent back into the home from the workplace and the nurseries were all closed down.
	The model of work and family life on which the old pensions system was based is very long gone. Women's and men's working and family lives are increasingly complex, with fragmented working patterns, a complex system of caring for children, parents and other dependants, and trying to combine that with making financial provision. The world has changed since the days of Attlee and Beveridge. Now we seek to legislate for the model of the family, working lives and the care of dependants. That is why I say that basing the new system around women and what is right for them will make it right overall, because it will focus our minds on what is different today from what was done when Beveridge and Attlee set up the original system.
	We know the position in which the old system has left women. I do not have time to go through the entire range of statistics, but listing them one after another shows how women have been disadvantaged. For example, 2.2 million women do not accrue rights even to the basic state pension. Retired men on average have between £50 to £100 per week more private pension than women of the same age. Almost two thirds of divorced and separated older women have no private pension income at all, and by 2020 there will be as many divorced women aged 65 to 75 as widows.
	I have about 10 other statistics, but if I go through them all, there will be no time for anyone else to speak. It is a uniform picture of women being disadvantaged and of inequality in the system, which does not reflect the reality of modern life. Again, if we get it right for the modern system of the family, working life and women, we should get it right overall.
	The Bill starts to do that, with the reduction in the qualifying years to build up a full pension entitlement and the reduction in the number of qualifying hours, and by positively crediting the time spent caring, so that for the first time we properly treat social contribution on an equal footing with cash contributions. Under the previous system, the cash contributions were credited but the social contributions were not, because it was not necessary. The woman would be looked after by the man. That is the way it worked.
	Personal accounts will give everyone the chance to save in a low cost environment, and restoring the link to earnings and embedding it in legislation will make it far more difficult than it was last time for a future Mrs. Thatcher to break the link again. We have the figures showing how those changes will bring far more women and far more carers into entitlement to pensions, and make it possible for those women to accumulate a decent pension in future.
	Instead of 30 per cent. being entitled to a full basic state pension, the Secretary of State explained that 75 per cent. of women will be entitled to that by 2010 and over 90 per cent. by 2025. The Bill is excellent and provides a good basis for adjusting to modern times and a modern world, not just for the next 40 years but hopefully beyond that, although I would not like to predict how the world will have changed over that period, given the present speed of change.
	As my hon. Friend the Member for Colne Valley (Kali Mountford) acknowledged, the set of proposals in the Bill has been carefully crafted and costed, but like other colleagues, I shall suggest some areas where I ask Ministers to look again to see whether we can stretch it a little further. I know that there was some dismissal of the way in which the tax relief disproportionately benefits the better off, but perhaps it is possible to do a little more stretching within that equation to deal with some of the issues that have been raised.
	Before I move on to that, I shall deal with a topic that has not been mentioned. Unless we sort out the gender pay gap, we will never achieve equality in retirement. Women who work full time earn 13 per cent. less in median hourly earnings and 17 per cent. less based on mean hourly earnings than men. Women are at greater risk of falling below the poverty line. If people are in poverty while they are in work, they take that poverty with them into retirement. That is why the statutory minimum wage was so important. It made a crack in that gap, but the gap is still there.
	It is important to place the debate in the context of the Women and Work Commission report. The commission was given the task of seeking to close the pay and opportunities gap for women within a generation. That ties in closely with the changes to the pension system. The Trade and Industry Committee, of which I am a member, is studying the Women and Work Commission report to see how and if it is to be implemented.
	I do not have time to discuss the excellent research findings in the report produced by the Equal Opportunities Commission with Scottish Widows, which looked at the psychology of choices made by men and women, which is clearly influenced by the financial resources that they have. It examines the proportions of men and women who say that they are able to save more money, and how much money they feel able to put into provision for their retirement. Women tend to use any money that they have to give to their children and to look after them, rather than making personal provision for their own retirement. That research is interesting.
	On the Bill and points that were raised by colleagues and others earlier, four out of five part-time workers are women. In spite of the provisions in the Bill, many will still find it difficult to build up their entitlement to a basic state pension. I, like others, can cite people who work, for example, as a dinner lady at lunchtime and in a corner shop in the evening, but who do not manage to get above the lower earnings limit, pay their national insurance contributions and gain eligibility in any of the jobs that they are doing. Will the Minister look into the possibility of amalgamating the hours and the work that they do, so that those people can be given a credit?
	It was pointed out to me by my hon. Friend the Member for Colne Valley after she had spoken that women who do not build up eligibility for credit and for pension will have to be paid something anyway. At the end of the day they will be given a credit of some kind, such as a minimum pension guarantee, so why not find a way to credit the work that they are doing and to amalgamate their various jobs? If they are doing a number of part-time jobs, none of which gets them into a position where they are paying NI contributions and therefore building up their entitlement, we should find a way for them to do that. I ask the Minister to consider that point, with which the Secretary of State expressed some sympathy.
	Carers UK applauds the introduction of the new carers credit and has highlighted the tens of thousands of extra carers who will become eligible because of the changes that are being made. However, the qualifying conditions mean that 40,000 people caring for 20-plus hours a week will still not get entitlement to basic state pension and that 60,000 people will still not get entitlement to the state second pension. My hon. Friend the Member for Northampton, North (Ms Keeble) gave some good examples of the sorts of people who are not covered and why that is. The Carers UK document sets out six categories of people who would clearly seem to be caring for people but will not be able to build up the qualifications they need to become eligible for getting the credits that would feed into their pensions. For example, there is the person who cares for someone but does not wish to claim disability benefits. There is the person who is looking after someone with fluctuating conditions, so they claim their benefit or credit one week, and then the next week they have to go back and say that the situation has changed. There is the person caring for someone who goes into hospital for long enough to lose their benefit. The Carers UK document sets out a whole range of situations in which people who are caring for others for more than 20 hours are week are unable to get the entitlement that enables them ultimately to get their pensions.
	In relation to the big debate that took place earlier about who might be able to certify that someone is a carer for 20 hours a week, Carers UK proposes that that could be done by a health or social care professional—a GP, a social worker or a health visitor. A GP may well know that a person with whom they are dealing has someone who is caring for them for that length of time, even if they are unable to say whether they need it. I ask Ministers to look again at that proposal, or at least to allow eligibility to rest not only with those with high-level disability or incapacity benefit.
	The EOC research found that if conditions were right, including the option of working flexibly, up to 1 million older workers said that they would re-enter the work force. The Minister might like to consider extending the right to request flexible working to all, which might partly sweeten the pill of raising the retirement age. It could be a slightly less daunting prospect if we say to people, "You might carry on working for longer, but this flexibility means that you do not necessarily have to work bang up to that retirement age."
	I congratulate the Government on carrying out a gender impact assessment. From April this year, all Government Departments will have to undertake that in relation to significant pieces of legislation under the new gender duty on public bodies. Perhaps the Minister could point out to his colleagues in other Departments that they will have that task in future. I look forward to some extremely interesting reports.
	My hon. Friend the Member for Northampton, North talked about the importance of information and publicity and had an interesting debate with my hon. Friend the Member for Aberdeen, South (Miss Begg) showing that whether or not the Government put out the right information it is crucial to think carefully about how to explain systems that remain complicated no matter how much we try to simplify them.
	We seem to be moving towards a consensus. I am pleased that that consensus reflects more accurately the world as it is now and moves us on from the world of 50 years ago. I hope that we can get this right in a way that is fair to women, to part-time workers, to their dependants, to carers and to men. If we move along those lines, we should end up with a pensions system for the future that is fair and reflects life as it is lived now, in all its complexity and with all its difficulties, and gives people a decent deal in retirement instead of leaving them in an appallingly unjust situation. I commend the Bill and hope that we will consider amendments to improve it further as it makes its way through the House.

Philip Dunne: Like many Members, I welcome the Bill. I am pleased to follow the hon. Member for Amber Valley (Judy Mallaber). Somewhat to my surprise, I found myself in agreement with many of her comments about the benefits of the Bill in bringing women, carers and others who have not been able to secure full state pensions into that category.
	It has been an interesting debate enlivened at one point by the revelation that my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) has his own shadow in the copycat form of the hon. Member for Yeovil (Mr. Laws). We are getting used to the Government looking to the Conservative party for inspiration for fresh policy initiatives—for example, in this Bill we have the linking of the state pension to earnings rather than prices, which was in the Conservative manifesto at the last election—but now we learn that the Liberal Democrats look to the Conservative party for their parliamentary questions.
	The Bill seeks to deal with a big demographic challenge that has been ticking away but has not been addressed by any Government for some time. An illustration of the consequences of that was brought home to me in my constituency the other day by the primary care trust, which had put together a report on our community hospitals that pointed out that more than 30 per cent. of the people in south-west Shropshire are now over 65. I accept that that proportion is much higher than the national average, but that is still rising rapidly. Those over 85 are expected to increase by 50 per cent. over the 10 years to 2013. As a result of medical advances and people living longer our future pension provision faces a rapidly growing funding crisis. The Bill is a first step in attempting to deal with that.
	Sadly, the Bill will do virtually nothing for many years for existing pensioners. Reservations have been expressed to me, and no doubt to other Members, by representatives of pensioner groups about the fact that such a forward-looking measure that does so little for existing pensioners. The link to earnings, which the Chancellor has left himself wriggle room to defer until 2015, means that for today's pensioners a very modest increase in their state pension might be forthcoming in anything from five to eight years' time. That does not give rise to much enthusiasm in the senior citizen forums that I attend.
	I welcome the introduction of personal accounts and the prospect of restoring some of the savings culture that has been so weakened, particularly in the past 10 years. When I have raised that with Ministers in the past, they have always tried to brush it aside by saying that it is entirely correlated with the strength of the economy, but it is not purely to do with the economy it is also to do with the culture and savings habits of the population.
	Let me deal with two main difficulties with the Bill. One is an omission and I hope that the other can be tackled in Committee. The omission is the lack of reform of public sector pensions. That is a missed opportunity. For party political reasons, the Government have not dealt with the disparity between public and private sector pension provision and established common rules for all pensioners. When the Secretary of State was challenged about that in the Select Committee, he said that he did not perceive it as a problem because 10 per cent. of civil servants change employment every year. He anticipated that that would continue so that, by 2026, only a minority of people in the civil service could retire at 60. He calculated that, by the time the measures were fully implemented, only 3 per cent. of civil servants would be entitled to retire at 60. That may be the case because the arrangements will be introduced over several decades. In 50 years, no one in the civil service will retire at 60. However, that is far too long a period for bringing the two sectors of society together. The Government have made a feeble attempt to find an excuse for not being prepared to tackle the public sector pension challenge.
	My hon. Friend the Member for Runnymede and Weybridge referred to the other issue when he mentioned the state second pension. The abolition of the contracted-out rebate and the proposals to move the state second pension on to a flat rate over time have revealed the prospect of many people who are in that pension regime saving for no return. The state second pension will effectively be a stealth tax dressed up as equalisation of pensions. That must be tackled, because there is an injustice in arrangements whereby the benefits for a specific category of people go to waste. I hope that we can consider that in Committee and ascertain whether we can introduce provisions to right the wrong.
	I want to concentrate on two other specific matters. The first is specific or general advice, which relates to the operation of personal accounts. It has been a thorny issue for the Government, not least because of their track record. Other hon. Members have mentioned the parliamentary ombudsman's devastating critique of pensions mis-selling, which the Government ignored but the public did not. It raises the question of trust. If the Government wish to encourage saving, the population needs to have complete trust and confidence that the governance and structures of the scheme in which it saves are subject to rules of conduct. Advice is key. As other hon. Members said, given the prevalence of means-testing, which will continue to apply to many who consider whether to opt in or out of the personal accounts scheme, it is important that people receive clear guidance about whether it is appropriate and in their interests to participate. The Government have failed to tackle the matter fully, although I expect that it will be picked up when we consider the second stage Bill in the summer.
	Trust covers so many different aspects. The collapse of final salary pension schemes has posed questions, with which we are all now familiar, about pensions. The Financial Services Authority imposes clear rules and procedures on private sector providers in the savings industry. The Government choose to ignore that when they describe the way in which the personal accounts system might work. That is a great mistake. When setting up a new system, it is vital for the Government to use clear, precise and careful language, especially when they describe what they want to achieve and try to build trust among the population.

James Purnell: Given that there will be no time to tackle all the points in the winding-up speech, I draw the hon. Gentleman's attention to the fact that the review that we announced today of the regulatory landscape will tackle the regulation of personal accounts. They should be regulated in the same way as any other financial product and we are considering precisely that issue. Of course, there is a difference between an informal discussion in a blog and the professional advice that one provides as part of a regulated service.

Philip Dunne: We will participate in that consultation and examine the Minister's pronouncements carefully, whether they are formal or informal. A problem with advice is that it adds cost. The Minister accepts that some sort of advice will be necessary, whether in a generic printed form or on websites. However, it needs to be clear, available and inexpensive.
	The second matter, which follows from the first, is trust in the system of governance. I asked the Secretary of State about independence during his opening remarks and I did not find his response reassuring. Independence and the perception of the independence of the regulatory body is vital because it helps establish trust in personal accounts. For individuals, many of whom will not have saved previously, to decide to lock up amounts of money for the whole of their working lives, they need to be sure that their savings will be administered properly, invested wisely and not be subject to Government interference.
	In the consultation stages before the Bill was published, many commentators called for the scheme to be independent of Government and accountable to Parliament, similar to the board of trustees of a defined contribution scheme. The Pensions Commission proposed that and the Select Committee agreed, as did many of the independent commentators, from the Consumers Association— Which?—at one extreme to the Investment Management Association acting for the professional investment managers at the other.
	Although the Secretary of State talked about independence, the Bill gives him specific powers. I should like to reiterate them, to ascertain whether the House believes that the personal accounts delivery authority will be independent. The Bill gives the Secretary of State powers to determine the average earnings calculation—surely that should be job of the newly independent National Statistics? He will have the power to remove the chairman or any non-executive. He will also have the power to determine the remuneration of the chairman, the chief executive and all the non-executives, covering their pay, their pensions, their allowances and their gratuities—it is interesting that the members of such an authority might expect gratuities—and to determine whether they are entitled to compensation on loss of office. He will also have the specific power, set out explicitly in the Bill, to issue guidance from time to time to the authority about the discharge of its functions. The authority will have to pay regard to that guidance.
	The authority will be independent in name only, not in substance. The Government need to be much more imaginative in granting independence to the authority and, more specifically, to its successor, the personal accounts board. Perhaps they might like to look to the Conservatives for ideas on how to grant independence, so that the public can have real confidence, over successive Governments, that their funds will not be at risk from Government meddling.

Ann McKechin: The overriding message from today's debate has been that neither the issue of pensions nor the Bill can be seen in isolation. The Government need to adapt to people's increasingly complex work and social lives, and to develop a new approach to preparing our citizens for making financial decisions appropriate to their needs. My hon. Friend the Member for Amber Valley (Judy Mallaber) has mentioned the need for a continuing effort to address the pay gap between the genders. Other hon. Members have mentioned the issue of those who suffer from long-term low pay, and their ability to make their savings work for them.
	I congratulate the Department for Work and Pensions on the way in which it has carried out the pre-consultation process, including the work of Lord Turner's commission. This is a good example of the Government doing the necessary ground work for an ambitious programme that will affect people's lives for the next 30 to 40 years. Building a robust and thorough consensus is very much part of that. Despite the very long speech by the hon. Member for Yeovil (Mr. Laws) on behalf of the Liberal Democrats, I am still somewhat confused as to what his proposals are. However seemed to suggest that he would be part of the consensus this evening. The Scottish National party has indicated its agreement in principle to a personal account system, and I shall be interested to hear how it envisages such a system operating under its own policies. No doubt its representatives will table amendments on Report, and it will be interesting to flesh out the debate at that stage.
	On the major points, the Government have achieved the consensus correctly, although there obviously had to be an element of compromise involved. The commitment to restore the earnings link is essential and, like many other Members, I would urge the Government to make that reconnection sooner rather than later. We need to ensure, as far as possible, that the real value of the basic state pension is at least preserved, and to encourage people to come on to the personal accounts system.
	In my opinion, the most important feature of these proposals is the automatic opt-in provision. Most people are aware that it makes sense to save for their retirement, but as I found out when I worked as a solicitor before coming into the House, persuading them to do so is like trying to get them to draw up a will. They know that it is the right thing to do, but many people, especially the young, have an inbuilt resistance to giving the issue serious thought leading to a definite decision. Death and retirement planning remain the modern social taboos.
	There is no doubt that this is a complex issue, however, and many people lack the knowledge to make an informed decision, or even to know where to go for proper advice. Poor awareness often translates into unrealistic expectations, particularly for those on the lowest incomes. I welcome the comments made on Monday by the Minister for Pensions Reform and the Economic Secretary to the Treasury about the need to improve people's understanding of their financial affairs in general. This must involve tackling the great deal of misinformation out there unfortunately, mainly among the most vulnerable and least knowledgeable in our society. This measure must also be part of a wider effort to persuade more people of the value of saving regularly to deal with emergencies when they arise and to control their personal debt and keep it at a sustainable level. Otherwise, we shall face the possibility of people deliberately opting out of the scheme for short-term emergency reasons and losing out in both the short term and the long term.
	A number of hon. Members have rightly mentioned the fact that we need to restore confidence in pensions. Again, this is particularly true for those on the lowest incomes. Although the financial services industry has been perfectly capable of dealing with people on higher incomes, it has never truly been able to offer stand-alone pension products for those on the lowest incomes. The level of administrative charges remains one of the most crucial factors in determining the worth of the scheme. That is why the reduction of the administrative charge for the proposed personal accounts to a much lower level than those charged on the open market will be significant for those on the lowest incomes. Given that at least one third of the adult population are not saving for their retirement at all, the need for such change is urgent.
	It is also true that the nature of work, our health as a nation and social changes such as the fact that 25 per cent. of us now live alone, make it difficult to imagine what is going to happen 30 to 40 years hence. The circumstances pertaining when our parent's generation entered the workplace had changed radically by the time they retired. My mother, who is 79 years of age, received a dowry from the civil service when she left to get married in lieu of her benefits; in fact, she has received no pension for her years' service. When she returned to the workplace, she was not allowed, for the first few years, to join the local authority superannuation scheme.
	Thankfully, those circumstances are now gone and past. The current adult population, however, are seeing rapid changes and much more variety in how people work, how long they expect to work and the type of jobs that they enter. Those who are entering the job market now will see even more change. We cannot just park the issue for 20 years at a time; we must be prepared constantly to review and alter arrangements to suit changing lifestyles.
	We have spoken about the raising of the pension age. Given that I represent a city that is routinely quoted as having the lowest life expectancy rates in the UK, the Minister for Pensions Reform will not be surprised to learn that while I understand the Government's motivation, I am also concerned that that must be met by a visible, firm commitment to address the health inequalities that bedevil cities such as Glasgow, and by an equally firm undertaking to keep the matter under review. Obviously, it is possible—I hope that it is less rather than more likely—that life expectancy rates will stall or decrease as new health problems emerge. Again, we must build flexibility into the system and keep it under regular review.
	Clearly, addressing the gender gap, reducing the number of years of qualification and reducing the number of hours for carers are important for our female population. We must be mindful, however, that affordability is much more likely to be a constraint for women than for men, with only 37 per cent. of women working full-time, compared with 60 per cent. of men. Women need to know that the new scheme will work for them and adapt to their life changes. As some of the problems experienced in relation to the tax credit scheme showed, we all underestimated to an extent the complexity of people's working patterns. We need to address that.
	The thoroughness of the gender assessment carried out was welcome and helpful. However, as my hon. Friend the Member for Aberdeen, South (Miss Begg) mentioned, we must ensure that the issue of trivial lump sum commutation is dealt with effectively. People will therefore be able to save with confidence, and even if their savings are low, which is likely for those who are over 45 when the scheme starts in 2012, they will get some value from them, even if only in the form of a lump sum. It is not, as the hon. Member for Yeovil said, that the scheme itself is at fault. Women's median average earnings are much lower than men's, and that is something that we should continue to address—the minimum wage has improved the position—but we should also remember that women live longer, so their annuity values will be lower. We must therefore ensure that they manage to escape the means-testing trap.
	I agree with many of my hon. Friends that we need to consider the issue of carers. With 120,000 carers caring for 20 hours-plus a week who will apparently miss out under the current regulations, we must test the issue against the effect on carers and ensure that they are relieved of a burden. Yes, as the Secretary of State mentioned, there are additional costs, but we are still providing 50 per cent. of tax relief to the highest earners in society, the great majority of whom are male. If the Government are to follow through the gender assessment impact process as thoroughly as I am sure that they want to do, they should consider whether continuing that form of benefit is justifiable given the proven needs at the other end of the spectrum, where most of those affected are female. Will the Department keep that in mind in ongoing negotiations with the Treasury?
	This is a good Bill that will deliver substantial benefits, particularly for women and carers, who are not covered properly by the pensions market. It is a major step towards encouraging confidence in long-term savings. However, it must be met with a firm commitment to tackling the other problems that I have mentioned, which have an impact on both pensions and income more generally.

Lorely Burt: I am grateful for the opportunity to speak because I have a special interest in the Bill. Although, as I am sure my speech will make clear, I am no expert on pensions, I am passionate about the subject. I speak for the Liberal Democrats on women's and equality issues, and I can think of no area in which this country has treated its women more shamefully.
	One in four women pensioners in Britain today lives in poverty. The average income of women pensioners is only 57 per cent. of that of male pensioners, and only 30 per cent. of women retiring today qualify for the basic state pension. A good many statistics have been quoted, so I shall simply say that more than 2 million women are poor enough to receive the means-tested pension credit. That will raise their weekly income to £114.05, which is still £14 below the Government's official poverty level income of £128 for a single person. Of those 2 million women, 20 per cent. will be in even worse poverty because, for whatever reason, they do not claim the means-tested benefit.
	It is not difficult to see why this state of affairs has arisen. For the most part, it is a self-perpetuating problem that will not be susceptible to resolution in the foreseeable future. As the hon. Member for Amber Valley (Judy Mallaber) observed, women earn less than men, so they accrue fewer pension contributions. Even if we compare the average full-time wages of the sexes, women earn 17 per cent. less than men—but many women work part-time so that they can care for growing families, elderly relatives and others, and part-time hourly earnings for women are only 88 per cent. of men's. Given their lower earnings, women's ability to pay any money into their pensions is diminished.
	Historically, as many Members have pointed out today, the pensions system was designed on the assumption that the husband would be the main breadwinner. Married women were led to believe that they would still receive pensions if they paid the so-called married woman's stamp, instituted by Beveridge in 1948. Too many found out too late that that was a fallacy. Even today, there are women who are still paying the married woman's stamp. But perhaps the greater contributor to poverty among the elderly, particularly women, has been the fall in the value of the basic state pension caused by the removal of the earnings link in 1980, on Mrs. Thatcher's watch. The basic state pension constitutes about half the income of women pensioners, a far greater proportion than that of men. Its value has now shrunk to £52.50 a week less than it would have been if the earnings link had been maintained.
	For today's 7 million women pensioners the picture is bleak, and for the fifth richest country in the world it is a national scandal. What are we going to do about it? In the Bill, the Government have gone quite a long way towards implementing the Turner recommendations, although if they had embraced the recommendations for a citizen's pension—which has been Liberal Democrat policy for some time—much of the detail of the Bill, which leaves out some people who deserve a pension, would not have been necessary. However, we welcome the Bill as far as it goes, although I shall respectfully point out some areas in which I think it could be made better and fairer.
	As we have heard, the Bill will help by reducing the number of years' contributions needed for someone to claim the basic state pension to 30, from the current 44 for men and 39 for women. That will help women because, as I have said, many will have taken time off to bring up children, care for elderly relatives and so on. The introduction of the 30-year rule will create a cliff edge for those who have failed to achieve the 30 years because they retired a day, a week, a month or a year or more too soon. The gap that they will face will be huge.

Mark Pritchard: Given the hon. Lady's point on the 30-year rule, what is Liberal Democrat policy on that? Will the period be 29 years or 31 years, or will it be some other period?

Lorely Burt: We will propose amendments to help those who fall short of the cliff edge to qualify. We will submit them in Committee, but let me say that the example given by the hon. Member for Colne Valley (Kali Mountford) about people with part-time jobs will be taken into account.

Mark Pritchard: In the spirit of consensus and wanting to be helpful, it would be helpful if Members knew in advance, if possible, of such Liberal Democrat proposals to enable us to deliberate on their detail, especially if the proposals warrant the support of the whole House. Do the Liberal Democrats propose that the period should be below or above 30 years?

Lorely Burt: We will table our amendments this evening, so the hon. Gentleman will know of our proposals as early as tomorrow.  [Interruption.] Yes, as my hon. Friend the Member for Yeovil (Mr. Laws) says, "If you show us yours, we'll show you ours."
	There should be recognition of the contribution that women have made to this country, particularly in the areas of unpaid work and caring for children and for the sick, the disabled and the elderly. We welcome the attempt that is being made in the Bill to right a wrong by enabling carers—men and women—who care for 20 hours or more a week to have their contribution counted towards pension credits. However, people who require care do not necessarily conform to neat categories of need. We can all recognise the picture of the severely disabled person who needs lots of care and attention; they are easy to identify. But we should also think about situations in which someone cares for a loved one who needs a lot of attention but does not qualify for the higher rate of disability living allowance. The hon. Member for Northampton, North (Ms Keeble) gave some good examples in that regard. Why should the level of disability dictate the allowances for the carer, who has to put in the hours of care regardless of what disability allowance the person that they care for is receiving?
	Those who care for people with intermittent needs will also be left out of this entitlement. A mother might have an adult child who has mental illness. That child might be okay for periods, but when the illness hits lots of time will be needed to care for them. Will that mother be able to get a full-time, well-paid job, knowing that they might have to break off at any time? We will be able to include many more people who deserve to receive carer's pension credits if we build a little more flexibility into the Bill. We will table amendments to that effect.
	Finally, I want to speak about the plight of pensioners today. Tomorrow's pensioners will be helped if the Bill is enacted but, to be frank, 3 million of them will be dead by 2012, having had no improvements in their harsh circumstances. Further, by 2012 the value of the basic state pension will have fallen to just 13 per cent. of average earnings—yes, just 13 per cent. That cannot be allowed to happen. The National Pensioners Convention and many other groups have called for the immediate restoration of the earnings link. The cost of that has been estimated at £600 million per annum. That is a lot of money, but it pales into insignificance compared with the billions of pounds that the Government have thrown away on computer systems that do not work and an illegal war in Iraq, and with what they propose to spend on identity cards.
	The Government have pledged to eradicate child poverty by 2020. That is a laudable aim, but under these proposals by then one in five of all pensioners will be in poverty—and, we can be sure, even more women than at present will be swelling the ranks of the poor. The Government can do something about that now. Planning for tomorrow is essential, but relieving the inequality and injustice of today is also essential if we are to be able to call ourselves a caring and civilised nation.

Lynne Jones: I want to endorse the comments that several colleagues made about the welcome improvements in state pension provision for women in this legislation. It is also good that there has been such consensus on measures in the Bill, particularly those on the restoration of the link to earnings. However, I have some concerns about the lengthy delay before that improvement will be brought about. We will still see the value of the state pension reduce and means-testing increase until 2012 or even 2015. As has been pointed out, that means that today's basic pension will be eroded in value from about £85 to £70, and potentially even to £67, a week. That is not good enough for a Labour Government.
	The Pensions Commission pointed out in its earlier reports that, based on the Government's own figures, spending on pensions and pensioner benefits was set to increase by 2050 to about 7.6 per cent. of gross domestic product from the current figure of 6.2 per cent., after an initial fall between 2010 and 2020 as the state retirement age for women increases. The commission proposed a trade-off between improved benefits and a rise in the state retirement age. For example, its proposed restoration of the link from 2010-11 at the latest could be accommodated if the state retirement age were increased to 69 by 2050 and spending increased to 7.5 per cent. of GDP, which is slightly less than the Chancellor's prediction if there is no change. The Turner report reckoned that if the state retirement age were increased to only 67 by 2050 spending would increase to about 8 per cent. of GDP.
	The Government have accepted that we should try to reduce means-testing by the restoration of the link to earnings, but they say that doing so to an earlier time scale cannot be afforded. Yet, according to their figures, we are talking about a cost of some £3 billion, at today's prices, by 2050. Adopting the 2010-11 proposal would mean an increase to £50 billion, compared with £47 billion, if adopted, in 2012 and £42 billion, if introduced, in 2015. Those are fairly small sums in terms of the growth in GDP that we might expect by 2050. None the less, there is a small, affordable gap and, as I said in an earlier intervention, it could be bridged simply by switching priorities. I do not agree with the proposal of the hon. Member for Yeovil (Mr. Laws) that savings should be made from public sector pensions. That is far too vague and probably not deliverable, and I do not particularly wish to advocate a reduction in the benefits of people working in the public sector, who generally receive lower remuneration than those in the private sector.

Mark Pritchard: I am grateful to the hon. Lady for giving way. Given her clear and evident reservations about the introduction of the average earnings link by 2012—she suggests that it is perhaps more likely to be 2015—and in the spirit of transparency and openness, come the next general election, will she be suggesting that pensioners in her constituency should expect that link not in 2012, but in 2015?

Lynne Jones: Well, I will not actually be standing at the next election, but I will be campaigning, and I hope to do so on as good a pensions package as possible. I do not anticipate that the change will be delayed until 2015—it is just that the Government have not specified whether it will be 2012 or 2015. I certainly hope that it will be well before 2015.
	Where could we obtain the additional resources to improve the pensions package proposed in the Bill? The Turner commission pointed out that we spend large sums of money on tax relief, which it described as costly and poorly focused. It did not advocate one rate of tax relief for pension contributions for various practical reasons, and my right hon. Friend the Secretary of State was right to point that out. However, at one of the all-party group meetings with Lord Turner, I had the opportunity to make my point about the large sums of taxpayers' money that go to some of the richest people in the land. Apparently—the figures come from my right hon. Friend the Member for Birkenhead (Mr. Field)—5 per cent. of the population get half of the tax forgone through tax relief on pensions. Lord Turner suggested a way forward that I commend to the Government. He suggested that the total pensions pot that is eligible for tax relief—now some £1.25 million—should be frozen. I noticed in the last pre-Budget report that my right hon. Friend the Chancellor projects an increase in that sum to £1.35 million—that is what I recall the figure to be, although I stand to be corrected. We have the opportunity, therefore, to shift our priorities from tax relief for those in the very highest income brackets—who are not necessarily the highest income earners—and use the money released to benefit the majority who are on fairly low incomes and depend on state provision.
	Ros Altmann makes a similar point, but she also points out that if the contracting-out provisions were abolished, £10 billion could be released annually. As I have said, the proposals would involve an increase of £3 billion annually by 2050. Another submission to the Work and Pensions Committee suggested that we could consider reducing or abolishing the tax relief on lump sum payouts by private pension provision. If the Government really wanted to prioritise improvement in state pension provision, they could do so.
	I endorse the comments by the hon. Member for Solihull (Lorely Burt) about the money that we will waste on a computer system for identity cards, which would be better spent on this issue. I could add to that the cost of replacing our nuclear submarines, but I shall stick to the possibilities for redirecting funding from within the pension system itself. If we do not improve the basic state pension and remove means- testing more than the Bill proposes, all we will do is ensure that we do not have any more means-testing by 2050 than we have at present. We all know the present disincentives to private saving, so I urge my right hon. Friend the Secretary of State to try one more time to bend the Chancellor's ear on this issue. If we do not make the improvements that I have outlined, we will not build a truly firm foundation for private pension saving. In addition, people being auto-enrolled into the national pensions scheme could discover, when they come to retire, that continual means-testing means they are still no better off.

Michael Weir: We have heard a lot in this debate about the consensus that exists in this House in respect of various pensions proposals. I suspect that members of the Scottish National party and Plaid Cymru stand somewhat outside that consensus. We support some aspects of the Bill, but other proposals cause us considerable concern.
	The hon. Member for Amber Valley (Judy Mallaber) is no longer present, but she said that the plight of women pensioners resonates with her older constituents. That may be true, but the Bill's biggest failing is that it does not tackle the problems faced by existing pensioners. The hon. Member for Aberdeen, South (Miss Begg) argued that it is not meant to, and I accept that that is probably the case, but we will fail to achieve the consensus that the Government claim to be seeking if we do not deal with those problems.
	The important consensus is the one that exists outside this House, among the general public. If we do not achieve consensus there, we will not get people to take up the personal account—an important element in the modernisation of the pensions system. If today's pensioners do not feel that their concerns are being addressed, they will continue to feel aggrieved, and they will pass that feeling of grievance on to others.
	When the National Pensioners Convention launched its alternative White Paper, it stated:
	"The Government's failure to address issues of pensioner poverty, unpopular means testing and the plight of 5 million existing women pensioners is the biggest whitewash of older people in the history of social policy".
	It does not get much more aggrieved than that, but that is a feeling shared by many of today's pensioners.
	All hon. Members probably agree that there should be a link between earnings and pensions, and there was some discussion earlier about exactly what that link should be. That is important, as it was announced today that general inflation had reached 3 per cent., the highest level in 10 years. However, the inflation faced by poorer pensioners is effectively much higher, as more of their income goes on things such as energy—and gas prices, for example, have risen by 40 per cent. over the past year alone.
	The Government have accepted that there should be a link between pensions and earnings, but have delayed implementation until 2012 at the earliest. As has been noted, the link might not be introduced until 2015. Perhaps I am getting cynical in my old age, but I suspect that the date may well depend on when the Chancellor becomes Prime Minister and decides to go to the country. The introduction of the earnings link is perhaps a sweetie to be pulled out at the appropriate moment—although the matter is less relevant in Scotland, as we will be well on our way to independence by then.  [Interruption.] I regard this as evangelising for poor English pensioners.
	The National Association of Citizens Advice Bureaux has asked for more details as to when the earnings link will be re-established. I do not suppose that the Minister will tell us, but it would be nice for pensioners to know when they might expect that uprating.
	However, even if the Government were to re-establish the link, it would do nothing to address the fact that today's pensioners have fallen way behind since the Tories cut the link in the first place, nearly a quarter of a century ago. Moreover, it is worth noting that what is being proposed is not the restoration of the link that has been talked about in this debate. Between 1975 and 1980, the Secretary of State with responsibility for pensions was required to have regard either to earnings or prices, depending on which of them he considered to be more advantageous to beneficiaries. That meant that there was some flexibility when it came to determining whether earnings or prices were of greater benefit in uprating pensions, whereas the new version will depend straightforwardly on earnings.
	In addition, although restoring the link with earnings will prevent the basic state pension from declining in value year on year, it will not make good the fall in the value of pensions that has happened over the years. That is an important point, which is not fully understood by many pensioners. I quote again from the alternative White Paper produced by the National Pensioners Convention. It is referring to the Government's White Paper, but the same point applies to the Bill. The document states:
	"The White Paper's failure to call for an immediate increase in the basic state pension and instead opt for a promise to restore the link with earnings some time between 2012 and 2015 will only give those on a full basic state pension approximately £1.40 a week more that year than they would receive anyway under the present system. Furthermore, the absence of any proposals to immediately improve existing state pensions has also in effect ignored the widely acknowledged scandal of low income amongst millions of existing women pensioners."
	Restoration of the link to the basic state pension will be delayed until at least 2012, when the value of the pension will have fallen to about 12 per cent. of average earnings—£71 in current terms. As has already been said, up to 3 million of today's pensioners will die before the link is restored. Worse still, if it is delayed until 2015, the value will be only £65, and it is estimated that up to 4.5 million of today's pensioners will never receive any benefit.
	Those are legitimate concerns among today's pensioners, and they affect the debate in the country, as well as attempts to find a consensus on the way forward. If we do not tackle those problems and provide a firm foundation for the future of the state pension, the Bill's proposals will not succeed.
	Much has been said about the citizen's pension. The Scottish National party and Plaid Cymru support the citizen's pension. After our last debate on pensions, I thought that we might be the last remaining parties to do so, but the Liberal Democrats seem to have come round to it again. The problem with the current system is that it is based on labour market participation, the effect of which is to translate poverty during people's working life into poverty in old age. We all know that many women and carers do not receive the full basic state pension, because they have a broken employment history. I support the provisions that will tackle that problem. We welcome them, but they will still leave too many people in poverty.
	Whenever the issue of pensioner poverty is raised, the Government point to the pension credit—as has been done this afternoon—but why should a pensioner have to rely on means-tested benefit for a decent retirement pension? The state should—indeed, it must—ensure that every one of our pensioners has a decent minimum income in retirement. By the very act of introducing pension credit, the Government accepted that the current rate of basic state pension is inadequate. With a citizen's pension, every pensioner would have a decent state pension, which under our proposals would be set at the current level of basic state pension, together with the maximum pension credit, and thereafter linked to increases in average earnings.
	If we introduce such a citizen's pension, we will ensure that all our pensioners are lifted out of poverty and given a firm foundation on which they can build their own additional pension provision. I do not believe that the personal account scheme that the Secretary of State proposed has any real chance of success, because it will be undermined by means-testing, especially for its main target group—those on relatively low incomes. Whatever the reality, there is a great fear that they will not gain much at the end of the day, due to the effect of the means-tested pension credit. If, however, it was linked to a citizen's pension it could provide a powerful incentive to make private savings and ensure that each pensioner had a much better standard of living in retirement.
	The hon. Member for Glasgow, North (Ann McKechin) expressed surprise that we supported the personal account. I do not know why, because we proposed something similar more than two years ago, and when the White Paper was debated recently I made it clear that we supported such a scheme as an important part of the future pension.
	Of course, it is legitimate to ask how we propose to fund the citizen's pension, and we have not shied away from that. We do not follow the same route as the Liberal Democrats, as we have published figures to show that by using the amount currently spent on basic state pension and pension credit—and, crucially, by reforming the current system of tax relief on private pensions, on which the hon. Member for Birmingham, Selly Oak (Lynne Jones) touched—we could afford to create a true citizen's pension. The problem is not lack of money, but lack of political will.
	The Government often tell us that we must take the hard decisions. Frankly, it is about time that the Government took a hard decision for the benefit of the majority of pensioners. It is worth noting the extent of the tax relief on private pensions. When we published our proposals, "A Secure Retirement for All", early in 2005, we calculated that the amount of tax forgone with the subsidy amounted to £11.4 billion a year. In his report, Lord Turner points out that the cost is £12 billion, but he goes on to refer to a further £8 billion in national insurance contributions, taking the total cost of the relief to £20 billion. In effect, that is a massive subsidy to private pensions, which could be used to provide a decent state pension for all.
	Worse still—I was surprised that the hon. Member for Glasgow, North also mentioned this—half the total cost of tax relief on private pensions is received by the richest 10 per cent. of the population. It is high time that tax relief was reformed to become much more progressive and transparent. In particular, it should be aimed at encouraging and rewarding low and moderate income earners to save for retirement. The Bill does not tackle that problem—that serious omission will undermine the whole idea of personal accounts. I note in passing that the TUC briefing also says that consideration needs to be given to reform of tax relief.
	Another aspect of the Bill with which we have great difficulty is the proposal to raise the state retirement age, which we believe will discriminate against those in many areas of the country where life expectancy is lower. The effect can be quite dramatic. If we take the example of a man in Glasgow—as already mentioned, one of the worst areas in this respect—I understand that life expectancy is about 69.3 years, whereas a man in Kensington in central London has a life expectancy of 80.8 years. Under the present system, Kensington man can expect to receive pension payments totalling £65,728—nearly four times that of the Glasgow man, who would receive a mere £17,888. If the pension age is raised to 68, Glasgow man would receive only £5,408, while Kensington man would receive 10 times more at £53,248. That is manifestly unfair.
	To be fair to Lord Turner, he recognised that problem and suggested that eligibility to pension credit should remain at age 65, but that has not been accepted in the Bill. I was slightly encouraged to hear the Secretary of State say that the Government were considering the matter further, which may result in some resolution of the problem. When the hon. Member for Bournemouth, West (Sir John Butterfill)—he is no longer in his place—was questioned about it, he said that it was all to do with health and particularly mentioned Scotland. Well, in Scotland, it is not all to do with health. It is to do with poverty, as the hon. Member for Aberdeen, South rightly said, and with poor housing. Nor is it just a problem in Scotland, as the same applies to many former industrial areas of England and Wales as well.
	It can be argued that inequalities in life expectancy may be eliminated over time, but although we talk about greater overall life expectancy nowadays, there is still a gap between different areas and until such time as that gap is closed, the problem will remain. As Age Concern mentioned in its briefing—Citizens Advice made a similar point—the impact will be disproportionately negative for people on low incomes, who may not have much choice about when they retire. The TUC drew attention to the same problem. It also said that there were many uncertainties about future mortality trends and that the Turner commission itself had identified some gaps in the data on the future of pensions. We therefore remain unconvinced that we should proceed with proposals to raise the state retirement age. Age Concern has also asked for assurances that increases in the pension age will be matched by measures to ensure that poorer groups do not lose out.
	There is an additional point. People may stay in the job market longer as a result of the changes and there are also the welfare reform proposals, which may bring many more people into the job market. The Government, in conjunction with the devolved Administrations, have to look seriously at how to create more jobs to mop up those groups. There is no point in getting people to work longer if the knock-on effect is on unemployment rather than pensions.
	To end on a note of some consensus, there are some areas of the Bill where we support what the Government propose.  [ Interruption. ] I am trying to be fair. We are generally supportive of the moves to create the national pensions saving scheme of personal accounts. However, I repeat that, in our view, that will work only in conjunction with a citizen's pension, to give confidence to those who are expected to use that scheme; otherwise, it will face the same problems as the current system. We also recognise that moves to increase the coverage of the basic state pension are sensible and have been widely welcomed in as much as they will offer some help to women and carers.
	We welcome the fact that the reduction to 30 years for the qualifying period, the carer's credit and the changes to the second state pension will help to boost the income of women and carers who have missed out on paying national insurance contributions because of their sometimes broken work records. However, we share the reservations voiced by Age Concern, which has called for the 30-year qualifying period and abolition of the 25 per cent. rule to be retrospective. The reality is that many older women, who are often among the poorest pensioners, will not benefit otherwise. Again, that move would go a long way towards addressing some of the concerns of today's pensioners. Only by doing that will we get a true consensus for moving forward.

Mark Pritchard: I am grateful to be called in this debate. I want to start with the comments made by the hon. Member for Angus (Mr. Weir) about a citizen's pension. Although his aim in trying to give an uplift to the standard of living for Scottish pensioners may be worthy, I wondered how that could be delivered in the context of an independent Scotland and where the revenues to pay for such pensions would come from, given that much of the revenue for Scotland at the moment comes from other parts of the United Kingdom. Although worthy in its aspirations and aims, that policy would be ruinous for the United Kingdom, for pensioners in Scotland and, more importantly, for already hard-pressed taxpayers in Scotland, suffering under a Lib-Lab Administration.
	I give a broad welcome to the Bill, although we have been waiting for some time for the Government to try to put right most of the wrongs that they have created—not least with the abolition of the dividend tax credit and the Chancellor's raid on pensions. My hon. Friend the Member for Ludlow (Mr. Dunne) rightly pointed to the key issue of trust. How can anybody trust the Chancellor again on pensions? Should he become Prime Minister, I will take that key message to my constituents. I think that it will be received with open ears, based on experience of the Chancellor's record. That raid on pensions stands at £5 billion and the figure is growing annually. That is a significant amount of money.
	Perhaps Members on the Government Front Bench will not really be interested in what I am saying, or believe it, so let me quote the right hon. Member for Birkenhead (Mr. Field), who is a well-respected Member of the House and a renowned expert on pensions. He said:
	"when Labour came to power we had one of the strongest pension provisions in Europe and now probably we have some of the weakest".
	So, even Labour Members of Parliament have recognised that fact, and it is not just one Labour Member of Parliament. Others have expressed concerns in the House today. Indeed, the hon. Member for Birmingham, Selly Oak (Lynne Jones) has expressed grave concerns about certain elements of the Bill. I am sure that her criticism of the Government is not based on the fact that she is not re-standing under a Labour flag, but is genuine and sincere—there is no reason why I or her constituents should question that.
	Pension credit has been discussed in detail and I do not wish to repeat the points that hon. Members have made. However, I earlier raised the important question of Europe and the 2 million economic migrants who have come to the United Kingdom since Labour has been in office. We welcome those people, who, in the majority of cases, have made a great contribution to the economy and the social fabric of our nation. However, it must be said that their pensions might represent another ticking time bomb, even though there are arrangements in place with other members of the European Union about the transfer of pensions.
	I noted that the Secretary of State's response to my question on the matter indicated that people who had not accrued 30 years' contributions towards their basic state pension would nevertheless receive a pension credit on top of anything that they had paid in for that pension. Anyone who has worked hard, saved and paid contributions for 30 years will have a basic state pension that reflects their individual efforts, while those who, for reasons of portability, geography, or the timing of their entry into the United Kingdom—whether they be European nationals, or people who have decided to become UK nationals—have not made such contributions will receive a top-up from the British taxpayer. That is a worrying indicator for the future, and given that the scale of economic migration is unlikely to decrease over the next few years as the European Union is joined by new members, such as Croatia, Serbia and Turkey, it is likely that UK taxpayers will be picking up the bill even for the pensions of the foreign nationals who come and settle here. People in some parts of the country are fed up with picking up the bill for all sorts of things at the moment, so I would be interested to hear what the Minister has to say about that. I am not making some sort of xenophobic or scaremongering comment, but asking a reasonable and rational question in the national interest: is this affordable, given the scale of migration?
	Hon. Members on both sides of the House have come across the Motherwell Bridge pension fund, and I am aware that Ministers have made several comments vis-à-vis the financial assistance scheme and that fund. However, the FAS does not pay out 100 per cent. compensation. Many of my constituents are much aggrieved that, although they have worked hard and made provision for their retirement, the financial rug has been pulled out from beneath their feet. What protection will there be in the future for people who have made such provision, albeit through different financial vehicles?
	I suppose that savings are the starting point of the whole debate. I believe that Help the Aged has said that means-testing is pernicious, and the trouble with the Bill is that it does not go far enough to try to end means-testing. Means-testing is a clear disincentive to saving. Many hon. Members will have constituents who have made provision for their retirement, yet who see people who have not made such provision receiving equal benefits—or even sometimes better benefits—to those who have made the effort to save. Of course, not everyone has been in a financial position in which they have been able to make provision for their retirement, so clearly there are many exceptions. However, the principle of rewarding people who save is not taken forward far enough in the Bill. I hope that the Government will flesh out in a little more detail how they will incentivise people to save and reward those who make the effort to save.
	I have other points to make, but I want to be kind to my hon. Friend the Member for East Antrim (Sammy Wilson). I know that he will make relevant points about the Bill and about the emperor from Neath, the Secretary of State for Northern Ireland, who is again seeking to introduce measures through orders, rather than through the hopefully revived devolved Assembly of Northern Ireland. Lastly, I would like to mention the local government pension scheme. Many of my constituents think that the Government have been disingenuous in trying to open up so-called negotiations and "reasonable" dialogue on the local government pension scheme. There are several thousand dedicated and skilled local authority workers in my constituency, and they are right to expect transparency and honesty from the Government.

Sammy Wilson: I thank the hon. Member for The Wrekin (Mark Pritchard) for giving me some of his time, so that I could contribute at the very end of this debate, especially as the issue is so important. Often, because of the way that business is dealt with in the House, representatives from Northern Ireland do not have the same opportunities as other Members to express their views and make amendments. In the short time available to me, I would like to put it on record that we broadly support the legislation. We judge it on three points. First, we ask whether it re-establishes the link between earnings and/or prices and pension payments. Secondly, we ask whether it will encourage saving. Thirdly, we ask whether it will help vulnerable people, especially women and carers, who are often described as second-class citizens when it comes to pensions.
	As far as the re-establishment of the link is concerned, there is the promise—but it is only a promise—that the link will be re-established by 2012 or 2015. The concern that many Members have expressed is that a large number of people currently living in poverty will die in poverty, without having received the upgrade in pension, and without benefiting from the Government's proposals. Indeed, in many cases, their poverty will increase as the real value of their pension falls between now and 2012 or 2015.
	On encouraging savings, I listened to the Secretary of State's opening speech, in which he talked about moving away from, and relying less on, means-testing. Of course, means-testing provides a disincentive for people, especially those on low incomes, to save for their pensions. For such people, there was not much benefit to be had from forgoing some of their income for a pension later on, as means-testing would kick in anyway. I remain to be convinced that the reduction in means-testing will be as great as the Secretary of State says. There are proposals in the Bill, especially to do with personal savings accounts, that could encourage people to save and make more provision for their pensions. However, like many other hon. Members, I am not sure that there is enough confidence for people to be attracted to personal savings, given the way in which the Government have raided pension schemes and destroyed personal pension schemes.
	On help for women and carers—the people who do worse in the pensions system at present—some of the proposals, such as the 30-year qualifying period and the measures for those who provide care for 20 hours a week, go some way towards dealing with the problem, but as other hon. Members pointed out, there are still people who will fall through the net. Indeed, Carers UK says that about 15,000 people will still not be covered. I realise that time has run out, but I appreciate the opportunity simply to put on the record our support for the Bill's general principles. We will examine the detail of amendments and other changes made during its progress through the House.

Nigel Waterson: It is a great pleasure to follow the hon. Member for East Antrim (Sammy Wilson), and I am grateful that he made his points both well and concisely.
	We have had an excellent debate, although enthusiasm for the Bill was tempered as Members examined the detail of the reforms and the hard choices and difficult issues that have to be worked through. We are in the 10th year of a pensions crisis, largely created and certainly made worse by the Government. Savings have almost halved, and 2 million pensioners live in poverty. Some 125,000 people have lost their pensions, and 60,000 pension funds have been wound up—a point eloquently made by my hon. Friend the Member for The Wrekin (Mark Pritchard). We should not forget the human stories among the welter of figures, statistics and projections. Hon. Members may have seen an article in the  Daily Mirror only a few days ago about Alan and Joan Brown, whose bodies were found when a bailiff called at their home in St. Helens. The article reported that Mr. Brown was a factory worker
	"whose employer went bust in 2001 and he was expecting a redundancy payout plus his pension ... But liquidators found a major financial problem and hundreds of staff at Ravenhead Glass in St. Helens ... were left empty-handed."
	When Mr. Brown's daughter was asked if the crashed pension fund contributed to her parents' deaths, she replied:
	"Yes, it played a part."
	Let us be in no doubt: we are talking about real flesh-and-blood people who face real problems. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) made clear in his opening speech, we broadly support the principles behind the Bill, but that does not mean that it does not contain imperfections and unfairnesses. We have argued for many of its principles which, if properly implemented, should improve pensions.

Paul Flynn: The last time that there was unanimity in the House on a pensions Bill was when Barbara Castle introduced the state earnings-related pension scheme. Ten years later, however, the Conservative Government reneged on that unanimity and virtually wrecked SERPS. Will the hon. Gentleman give an undertaking that for the foreseeable future any Conservative Government will respect the unanimous decisions that I expect the House to make on the Bill?

Nigel Waterson: If the hon. Gentleman had attended our debate earlier, he would have heard a discussion of that historic subject. I will, however, come on to consensus and its limits.
	We have serious concerns about the Bill. Linking the state pension with average earnings is the right thing to do—indeed, it was promised by my party at the last election, so we support the principle of the Bill. However, like many hon. Members, we are concerned that the measure could take a long time to implement and that implementation is still subject to the Chancellor's escape clause. We should not be surprised by the Chancellor's grudging attitude to the policy. After all, he built his now-tattered reputation for fiscal prudence by telling the Labour party that it could not restore the link with earnings. In her excellent speech, the hon. Member for Colne Valley (Kali Mountford) was good enough to concede that the decision to break the link was "reasonable and rational". We are concerned that current pensioners and people who are about to become pensioners will lose out—a view also expressed by the hon. Members for Angus (Mr. Weir), for Birmingham, Selly Oak (Lynne Jones), and for Glasgow, North (Ann McKechin). In its briefing, Help the Aged says that
	"reducing the contribution record to 30 years for a full Basic State Pension will produce a cliff edge of differential entitlements for those retiring either side of April 2010, failing to lift many current pensioners out of poverty and creating problems for women retiring between now and 2010."
	We welcome the changes to provisions for carers, and particularly to women's pensions, which are the last great unfairness of the pension system, and must be addressed. Again, that was dealt with in our last manifesto. The issue was touched on eloquently by the hon. Members for Northampton, North (Ms Keeble), for Aberdeen, South (Miss Begg), for Solihull (Lorely Burt) and for Amber Valley (Judy Mallaber). An excellent technical point was made by the hon. Member for Burton (Mrs. Dean) about paying credits to the right partner—a subject that we will want to consider in Committee.
	On the reactions of outside bodies, the general secretary of the National Pensioners Convention, Joe Harris, stated:
	"The government has completely ignored the needs of today's pensioners and the fact that over 2 million of them still live in poverty, the vast majority of which are women. 3 million older people will have died before ministers restore the link with earnings".
	I have mentioned the cliff-edge problem for women pensioners, which will create some glaring unfairnesses in later years.
	We see the force of the argument for gradually increasing the state pension age, but we wish to hear much more from Ministers about flexible working practices and retraining for older workers. It is interesting that Ministers have downgraded their estimates of the saving from abolishing the contracted-out rebate. We wish to hold the Secretary of State to his promise that that saving will be reinvested in pension saving.
	On personal accounts, we agree with boosting workplace saving and with auto-enrolment. That also harks back to our last manifesto. However, for us there are not just one but four elephants in the room. The first is means-testing. That is the cancer that eats away at saving for retirement. Unless the growth of means-testing is put sharply into reverse, the Government's reforms have little chance of success. Even after the reforms, the Government's own figures suggest that means-testing will continue at about 30 per cent. That is bad enough. Apart from those who are among the 30 per cent., how are people to know early in their career whether they will be one of the 30 per cent.? A respected independent body, the Pensions Policy Institute, has reached a very different conclusion. It thinks the figure could be 45 or even 50 per cent. Attempts to narrow the gap between the PPI and the DWP have apparently not borne fruit.

Quentin Davies: Does my hon. Friend agree that since the Government are not bringing in the new earnings link until 2012 at the earliest, and possibly not for a few years after that, and that in the meantime the pension credit remains earnings-linked, over the next five years or so the means-testing problem will get a good deal worse because the discrepancy between the two figures will increase?

Nigel Waterson: My hon. Friend is right. If we carried on as we are until 2050, on the Government's own figures, by the middle of the century 75 per cent. of pensioners would be subject to means-testing.
	I was explaining that the PPI and the DWP have been unable to narrow their differences. The PPI told me today:
	"We are unlikely to change our projections, because they still seem reasonable to us."
	I have a suggestion to make. Perhaps the Minister can take it up in his winding-up speech. As he knows, there is a new procedure to allow a Standing Committee to hold an evidence session or sessions. Why do we not factor into the Committee stage of the Bill an evidence session, bring along the boffins from the DWP and the other boffins from the PPI and get them to argue the case and their differing assumptions in front of the Committee? The issue is central and crucial.
	The second major concern across the industry is levelling down. The National Association of Pension Funds and the Association of British Insurers, among others, have expressed concerns. In a recent report the NAPF suggested that if there is severe levelling down, pension savings could be cut by as much as £9 billion overall. Potentially, the Government have made matters worse by moving to a cap of £5,000—not what was recommended by Turner, but a figure which in theory could draw in almost all existing pension savers—a point touched on in his speech by my hon. Friend the Member for Grantham and Stamford (Mr. Davies). That, combined with the lack of a level playing field when competing with existing provision and the costs and red tape heaped on existing schemes by this Government—I am delighted to see the former Pensions Minister, the hon. Member for Croydon, North (Malcolm Wicks), in his place—highlights the real danger of employers switching to personal accounts. It must also be said that the levels of contribution built into personal accounts will not deliver a particularly comfortable retirement. True, it may, if it works properly, bring people into the system who are not saving at all, but equally it could reduce the standard of living in retirement for many people; it should be seen as a minimum, not the norm.
	Thirdly, there is the potential for mis-selling to people who should be advised to opt out of the system. That was touched on by my hon. Friend the Member for Ludlow (Mr. Dunne).
	Fourthly, there is the issue of confidence. The continuing plight of the 125,000 people who have lost pensions remains a stain on the Government's record, and their unwillingness to follow the ombudsman's recommendations is a disgrace, as well as a constitutional outrage. I am delighted that my hon. Friend the Member for Hemel Hempstead (Mike Penning) was able to make his usual stirring case for the Dexion pensioners. If these reforms are to work, the Government have to restore confidence in pensions generally. That means tackling the ombudsman's report in a constructive fashion, scrapping the financial assistance scheme, and sorting out finances to deal with the shortfalls in the FAS so that proper help can be given to the people whose claims predate the Pension Protection Fund. While they are about it, perhaps the Government could drop their visceral opposition to the scrapping of compulsory annuitisation.
	We have heard much today about consensus, but what does that mean in reality? I think that the hon. Member for Yeovil (Mr. Laws) was talking about a consensus different from the one that we have been engaged in. He is still peddling the unaffordable and unworkable citizen's pension. I am sure that the Minister was keeping a score card of the spending commitments that popped up in his speech.
	Yes, we are engaged in a consensus-building exercise, for all the right reasons. Pensions reform will have effects for decades. We need to achieve the right results, and they must be robust and capable of passing the test of time and surviving changes in Government. Even if we agree with the Government's direction of travel, we have serious concerns that are shared by lobby groups and large sections of the pensions industry. Consensus must be transparent: it cannot be an excuse for shallow analysis, argument by assertion or dodgy data. There must be no cosy deals, smoke-filled rooms or blank cheques. We will press Ministers hard, especially in Committee, to spell out the effects that the reforms will have on future and existing pensioners and on pension savings in the years to come.
	As I have outlined, we wish to see fairness between different groups and generations. We want to be sure that personal accounts will generate more savings as well as more savers. Even in this Bill, we wish to put down some important markers about how personal accounts will develop. I fear that Ministers are all too keen to shuffle off some of the difficult questions to the delivery authority. As usual, my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) spoke with great authority on those matters. We will therefore seek to place in the Bill some clear criteria for the development of the authority and yardsticks for judging the success or failure of personal accounts in due course.
	My party remains committed, as we always have been, to boosting saving through the workplace and introducing auto-enrolment, but we wish to be sure that these reforms do not have perverse effects whereby millions will save to no purpose because of means-testing, or more generous existing pension provision will be eroded. We want the reforms to work, and we will work hard to ensure that they do. We will seek to persuade the Government when we think that they are going wrong. I am always infected by the optimism of the Secretary of State on the likely success of his reforms. I was interested to see his optimism on display in relation to another subject in  The Mail on Sunday, where he is quoted as saying:
	"I could emerge from nowhere to win, just like John Major."
	We wish him well in that endeavour too.
	However, we broadly support the reforms. Why would we do otherwise? We have every hope and expectation of being in government when the reforms are implemented. For all the reasons that I have outlined, I shall not invite my hon. Friends to oppose Second Reading.

James Purnell: It has been a good debate and we welcome Conservative Members' support for the Bill. I pay tribute to the Pensions Commission for its work. It laid the foundations for consensus and its report was a model of its kind. We should thank the commission for that.
	We want to build a consensus because, as the hon. Member for Eastbourne (Mr. Waterson) said, the policy needs to last for decades. Building a consensus will help make that possible. We were delighted to learn that Conservative Back Benchers were part of the consensus. The hon. Members for Bournemouth, West (Sir John Butterfill), for Ludlow (Mr. Dunne) and for Hemel Hempstead (Mike Penning) all expressed their support for the policy. That also applies to all the Labour Members who spoke. It is worth noting that all our speakers were women—that demonstrates the radical change to benefits for women for which the Bill provides. It is nice for once to be the token man on this side of the House.

Paul Flynn: I am grappling with the conundrum of why restoring the link was denounced for the past few years as old Labour policy but is now acclaimed as new Labour policy. Does my hon. Friend agree that the best way of restoring full confidence in the Government's intentions is to establish a link between the changes in the basic state pension and those in hon. Members' salaries?

James Purnell: I am sure that my hon. Friend can put that proposition to the House authorities. I am glad to say that I am not responsible for that—he must lobby the hon. Member for Bournemouth, West.
	I am glad that Conservative Members are at the heart of the consensus. They raised a couple of issues, with which I shall deal. However, I remain unsure whether the Liberal Democrats are part of the consensus. We shall find out shortly. I suspect that they do not want to vote against the Bill because they are worried about being accused of not supporting the improvements in it. Given that the hon. Member for Yeovil (Mr. Laws) said that he supported the Bill, but opposed almost all its policies; that he wants to end means-testing, but would not tell us how he proposed to do it; and that he wants to spend at least 0.5 per cent. more GDP on pensions, but when asked how he would fund it, he replied, "You've done it with health", we have no idea about his policy for next election. Indeed, it fell apart before our eyes as he spoke.

David Laws: rose—

James Purnell: I am happy to let the hon. Gentleman dig himself further into the hole.

David Laws: Let me test the extent of the consensus on the Labour Front Bench. Earlier, the Secretary of State said that the vast majority of people who opted for personal accounts would gain £2 for every £1 that they put in. That appeared to contradict the Department's report. Does the Minister stand unambiguously behind the Secretary of State's every word?

James Purnell: Of course I do. The Secretary of State made the position clear when he intervened on the hon. Gentleman.
	I believe that there is consensus in the House on the key planks of the reforms—it may even extend to the Liberal Democrats. There is consensus about restoring the earnings link, automatic enrolment and compulsory employer contributions. Indeed, there is consensus that it is right to complete Barbara Castle's work and ensure that women are not second-class citizens in the pension system, and on eliminating the gender gap in equality.

Kelvin Hopkins: I am pleased that the Government have decided to restore the link with earnings, albeit not until 2012. However, what do we say to the 3 million pensioners who will no longer be alive in 2012 and want something now?

James Purnell: We have increased pensioner benefits roughly in line with earnings if we take into account winter fuel allowance, free television licences and tax cuts—

David Laws: Tax cuts?

James Purnell: Tax cuts for older people—the increased age-related allowances.
	Let me make progress and answer as many points as possible because several important matters were raised. My hon. Friend the Member for Burton (Mrs. Dean) raised the important issue of her constituent who might miss out on extra pension contributions because child benefit had been paid to the father rather than the mother. My hon. Friend has campaigned on that issue resolutely, and I am delighted to be able to tell her that we will address that problem through the Bill. I think that her constituent will retire after 2010, so she will be able to benefit from the new regulations that will define those engaged in caring. Although that will usually mean that the credit goes to the person receiving child benefit, there will be flexibility to address the particular issue that my hon. Friend raised.
	The hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Grantham and Stamford (Mr. Davies) raised the issue of the cliff edge. We need to remind ourselves of why we are introducing the Bill. We are doing so because at the moment only 30 per cent. of women receive a full state pension, compared with 85 per cent. of men. We want to put that right in the Bill. We could have followed the ordinary way of introducing policies such as these, which is to phase them in over time. If we had done that, however, we would have made progress too slowly—so we decided to bring in the policy in one stage in 2010, at which time 75 per cent. of women will benefit, compared with the 30 per cent. who benefit now.
	The hon. Member for Runnymede and Weybridge said that he wanted to bring in such a measure retrospectively for everyone and not have the cliff edge, but that would cost £1 billion, which is simply unaffordable. I am sure that he accepts that a line has to be drawn somewhere, and we have to say where that is to be. No one would benefit from his suggestion of phasing in the policy after 2010. The only difference that that would make is that women who would have benefited from our proposed changes would not do so. I understand why hon. Members have raised this issue, but a line has to be drawn somewhere, and 2010 seems to be the right time because before that women will be retiring at 60, whereas the women who will benefit from this measure will be retiring later.
	We will of course look in detail at the points raised by my hon. Friends the Members for Northampton, North (Ms Keeble) and for Colne Valley (Kali Mountford) about women who are doing two jobs that pay below the lower earnings limit. The problem should be addressed by the reduction in qualifying years to 30, however, and if we were to introduce a separate measure to deal with it, it would be complex for employers and could have consequences for the employment of those on low wages. We would therefore be reluctant to do that.
	My hon. Friend the Member for Aberdeen, South (Miss Begg) raised the issue of grandparents and we will be happy to look into the matter. It is worth saying, however, that it is possible to designate a grandparent as the recipient of child benefit if both parents are working. My hon. Friend might want to consider whether that is an adequate solution to the problem that she raised.
	Many Members, including my hon. Friends the Members for Northampton, North, for Aberdeen, South and for Amber Valley (Judy Mallaber), and the hon. Member for Hemel Hempstead (Mike Penning), mentioned carers. We will examine in detail in Committee the solution that has been put forward today—to include the provision as part of the local authority assessment period—to determine whether that would be an appropriate way of responding. Those are the points that were raised about women and carers and I hope that I have been able to address the concerns that some Members have expressed while welcoming the broad thrust of our proposals.
	Another key part of the debate related to the uprating of the basic state pension, which was raised by the hon. Members for Runnymede and Weybridge and for Yeovil. It is worth remembering that the last time we debated this issue, Opposition Members said that this measure was never going to be introduced. Fortunately, the Bill spikes that particular accusation by guaranteeing in legislation that the link will be restored in the next Parliament. Our policy on this is clear. Our objective is to restore the link in 2012, subject to affordability. However, the hon. Member for Runnymede and Weybridge could not even guarantee that. He could not guarantee that he could support his public spending plans. He could not even answer the point that my hon. Friend the Member for Burnley (Kitty Ussher) raised, to which I shall return later. However, he has less of a problem than the hon. Member for Yeovil.
	I was adding to my Laws index during the debate, and I shall now tot up the small spending commitments that the hon. Member for Yeovil has made. He is going to try to deal with the cliff edge, and with the issue of people having two jobs that pay below the lower earnings limit. He said that he would deal with frozen pensions—that is another £400 million—and that he would spend 0.5 per cent. of gross domestic product on his citizen's pension. He also said that he would spend another £1.5 billion on restoring the earnings link immediately. I know that he has a money tree, but his proposals represent a friendly-fire attack on his own shadow Chancellor, who must feel dread every time the hon. Member for Yeovil opens his mouth. Of course, when in Government affordability is the limit of the possible. We have made clear how the proposals are affordable. They are affordable because of the tough decisions taken in the Bill on the state pension age. We are grateful for his and the Conservative party's support on that issue.
	Others, including the hon. Member for Angus (Mr. Weir) and my hon. Friends the Members for Aberdeen, South and for Glasgow, North (Ann McKechin), raised the issue of the effect on poorer socio-economic groups. I understand those concerns. As the hon. Member for Angus said, that issue affects English industrial towns as much as it does other towns. For instance, people in my constituency die earlier than those in richer parts of the country. The right solution, however, is to address the causes: poverty, health inequality and occupational health. We must ensure that there is support for people who cannot work when they are closer to retirement. The wrong answer would be to duck that choice and pursue a policy that we cannot promise to deliver, because we cannot know how it will be affordable over time.
	The third issue that I want to address was raised by many Opposition Members—means-testing. It is an important issue, and the Bill more than halves the proportion of people who would have been subject to mean-testing. It is worth taking a step back and reminding ourselves what means-testing means in this context, namely, giving more money to poor people, disabled people and carers. The hon. Member for Yeovil talks about reducing the number of people who are means-tested, but 80 per cent. of those people who will get pension credit under our proposals in 2050 will receive more than the £115 under guarantee credit. Does he want to tell us how he will end means-testing? We would be interested to listen, as he clearly failed to answer that point in this debate.
	The hon. Member for Yeovil's policy on means-testing fell apart during the debate. At one point, he said that his citizen's pension would be based on people paying tax. Then he said that it would be based on the number of years for which people had been resident in the country. If so, he will have to have some kind of means-tested support for people who have not been resident for more than a certain number of years. He refused to say whether he would take benefits off people getting more than £115 under our proposals. Half of those people are getting more than £115 because they are disabled or are caring for someone with real care needs. Is he seriously proposing taking money off someone on £170 a week who is caring for a sick husband or wife, so that he can say that he is reducing means-testing? I will give way to him if he will confirm that.

David Laws: Does the Minister accept the PPI figures that make clear that, because of the effect of means-testing, in some extreme circumstances people who put £1 into personal accounts could end up losing the majority of their money?

James Purnell: Yet again—for about the fifth time—the hon. Gentleman has refused to answer the question. Until he answers some of those questions, he will have no credibility on the issue of means-testing. I look forward to debating such issues in Committee, as it is important that they receive proper scrutiny. We will also scrutinise his leader's policy to abolish the state second pension, which would mean 7.5 million people losing up to £1,000 a year. I am sure that my hon. Friends will be happy to discuss that policy with him at the next general election.
	We will be very happy to examine the Conservative party's spending plans. We are glad of its support in theory for the Bill, but its shadow Chancellor's spending plans clearly mean a reduction of public spending in GDP— [Interruption.] He spelled that out clearly. The proposals that we are debating tonight mean an increase in public spending in GDP. Until the hon. Member for Runnymede and Weybridge tells us how he will fund that, his commitment will only be theoretical, not real.
	 Question put and agreed to.
	 Bill accordingly read a Second time.

PENSIONS BILL (PROGRAMME)

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A(6) (Programme motions),
	That the following provisions shall apply to the Pensions Bill:
	 Committal 
	1. The Bill shall be committed to a Public Bill Committee.
	 Proceedings in Public Bill Committee
	2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 8th February 2007.
	3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
	 Consideration and Third Reading
	4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
	 Other proceedings
	7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.— [Mr. Heppell.]
	 Question agreed to.

PENSIONS BILL  [MONEY]

Queen's recommendation having been signified—
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with Bills),
	That, for the purposes of any Act resulting from the Pensions Bill, it is expedient to authorise—
	(1) the payment out of money provided by Parliament of—
	(a) any expenditure incurred by the Secretary of State by virtue of the Act, and
	(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided, and
	(2) the payment into the Consolidated Fund of any increase attributable to the Act in the sums payable into that Fund under any other Act.— [Mr. Heppell.]
	 Question agreed to.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Excise

That the Excise Duties (Surcharges or Rebates) (Hydrocarbon Oils etc.) (Revocation) Order 2006 (S.I., 2006, No. 3235) dated 6th December 2006, a copy of which was laid before this House on 6th December, be approved.— [Mr. Heppell.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
	That the draft Excepted Vehicles (Amendment of Schedule 1 to the Hydrocarbon Oils Duties Act 1979) Order 2006, which was laid before this House on 6th December, be approved. —[Mr. Heppell.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Order [9 January] and Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Electoral Commission

That an Humble Address be presented to Her Majesty, praying that Her Majesty will, with effect in each case from 19th January 2007, reappoint James Samuel Younger to be the chairman of the Electoral Commission for the period ending on 31st December 2008, and further reappoint Pamela Joan Gordon to be an Electoral Commissioner for the period ending on 30th June 2007. —[Mr. Heppell.]
	 Question agreed to.
	 Ordered,

Merchant Shipping

That the Merchant Shipping (Inland Waterway and Limited Coastal Operations) (Boatmasters' Qualifications and Hours of Work) Regulations 2006 (S.I., 2006, No. 3223), dated 7th December, be referred to a Delegated Legislation Committee.— [ Mr. Heppell. ]

PETITIONS

Police (Peterborough)

Stewart Jackson: The petition has 1,000 signatures. It reads as follows:
	The Petition of residents of Werrington, Peterborough, and others,
	Declares the Petitioners' desire for a more visible Police presence in the Werrington Centre, Peterborough, to reduce the level of violence, intimidation and vandalism, which Peterborough's otherwise extremely capable and dedicated officers are struggling to prevent due to the minimal resources available to them.
	The Petitioners therefore request that the House of Commons urge the Secretary of State for the Home Department to use his powers to provide a more visible Police presence in the aforesaid location, thus helping to make it a safer and more pleasant place to shop and work.
	And the Petitioners remain, etc.
	 To lie upon the Table.

Hospital Services

Richard Younger-Ross: I wish to present a petition from constituents who are concerned about cuts in service at our local hospitals, and particularly the cuts in the opening hours of the minor injuries units at Ashburton and Bovey Tracey hospitals.
	The Petition of County Councillor Sally Morgan, residents and users of rural Community Hospitals and Minor Injury Units in the Teignbridge and South Dartmoor area
	Declares that they are deeply concerned for the future of the Minor Injury Units at Bovey Tracey and Ashburton Hospitals.
	The Petitioners therefore request that the House of Commons and her Majesty's Government consider the pledge laid out in the Government white paper "Our Health, Our Care, Our Say" that
	"community facilities should not be lost in response to short-term budgetary pressures..."
	And ensure that rural health services are resourced fairly, allowing the Minor Injury Units to remain open for the future.
	And the Petitioners remain, etc.
	 To lie upon the Table.

CLOSTRIDIUM DIFFICILE

Motion made, and Question proposed, That this House do now adjourn. —[Huw Irranca-Davies.]

David Burrowes: It is a pleasure to have secured, for the first time, a debate on clostridium difficile. The subject is important, and merits not merely a short Adjournment debate but a longer debate, perhaps in Government time. Clostridium difficile infection is recognised by the Health Protection Agency as the most important cause of hospital-acquired diarrhoea. The purpose of this debate is to challenge the Government on whether C. difficile—as I shall refer to it from now on—is given the importance that it deserves in action as well as words.
	The debate is timely, given that last week a Department of Health memorandum warned that C. difficile was now
	"endemic throughout the health service, with virtually all trusts reporting cases".
	The official statistics paint only a partial picture. In 2005 there were 51,690 reports of C. difficile among people aged 65 and over; in 2004 an estimated 1,300 deaths were attributed to it. There are clearly at least seven times more cases of C. difficile than of MRSA—methicillin-resistant Staphylococcus aureus—and at least four times more deaths from C. difficile than from MRSA. But is C. difficile receiving the attention that it deserves? Many would describe it as the Cinderella of hospital-acquired infections, but it deserves to be at the centre of everyone's attention, given its prevalence and the risks of fatality.
	The purpose of the debate is also to highlight the tireless efforts of my constituent Graziella Kontkowski, who, with her brother Mark—both are here in the House tonight—set up a website and forum, www.cdiff-support.co.uk. There are literally thousands of hits per day from the many people who wish to receive support and advice, and to give their stories. That highlights the profound concern about C. difficile throughout the country.
	My constituent was motivated by her and her family's experience with her grandmother, who sadly and tragically died on 26 September 2005 as a result of contracting C. difficile at North Middlesex hospital. Graziella tells me that half the ward became infected with the deadly bacteria, all due to lack of hygiene. Measures were not taken to prevent the spread of the bug, and patients and their relatives were not given information about the severity of C. difficile. Graziella's efforts to get to the truth and to secure improvements at North Middlesex university hospital and the other local hospital, Chase Farm, spurred her to set up the website and to help others in a similar situation to that of her family.
	C. difficile is an appalling infection, attacking particularly the elderly on prescribed antibiotics. The symptoms of severe diarrhoea, stomach cramps and fever, often followed by dehydration, take their toll on the vulnerable. Loss of pride and self-esteem is great, and extremely sad for relatives as they watch the deterioration happen before their eyes. That is particularly aggravated by the lack of information about what is happening. That is why the C. difficile support group was set up, and that is also why the Government must take urgent action.
	Many sad cases could be recounted, such as those of elderly patients who have fought successfully for years against cancer only suddenly to be struck down by C. difficile, and to die in a matter of weeks. Such tragic circumstances were highlighted in the outbreaks of C. difficile at Stoke Mandeville hospital that ended in 2005 and that led to at least 33 deaths. A Healthcare Commission report challenged the Government approach, not just to isolated incidents of infection control, but to the whole policy on health care.
	The report stated:
	"The achievement of the Government's targets was seen as more important than the management of the clinical risk inherent in the outbreaks of C. difficile."
	Have the lessons from that report been learned? Let me give another quote that highlights the lessons that need to be learned nationwide by all trusts:
	"operational problems arose out of the need to juggle a number of 'must do' objectives, including the control of finance, the reconfiguration of services, and meeting targets for waiting times."
	The juggling of those targets and reconfigurations is a reality across the country. In the Enfield area, Chase Farm hospital is facing the prospect of cuts to its accident and emergency services and doctor-led maternity services, and North Middlesex university hospital is debt-ridden. The risk is that as they juggle their priorities, they will drop the ball of infection control, particularly in respect of the care of the most vulnerable—the elderly. That is the Government's responsibility. As Graziella has said:
	"The government has set hospital trusts targets, in the process of trying to achieve these targets patient care has been compromised and standards have dropped drastically now making hospitals a dangerous place to be in. People are no longer afraid of going in to have treatment but what infections they might catch. Does the Minister not feel that is unacceptable"?
	The key question is: have lessons been learned? However, perhaps that could be prefaced by another question: do the Government know the extent of the problem, so that they can tackle properly the C. difficile problem? There is evidence of under-reporting; there is mandatory surveillance only of over-65s, so there is no obligation to report on under-65s.
	Let me refer the Minister to three examples on the C. difficile support website this week. There is an example of poor hygiene not from someone older than 65, but from a 23-year-old young man. He said that he suffered from ill health; he had suffered from Crohn's disease. He entered hospital and thought he
	"was in a clean environment ... I was suffering intense diarrhoea and reported it to the doctors and nurses that were looking after me. They told me it was nothing to worry about. A day or so later, when going to the toilet, I noticed excrement on the floor leading up to the toilets themselves. When I went into the toilet, there was...fecal matter all round the bowl and over the floor. I said to the staff about this, but it wasn't cleared up for a good few hours after I reported it. The following day I was feeling a lot worse. Nausea and severe stomach cramps along with dizzy spells made me realise that there was something seriously wrong.
	I tried telling the doctors about my concerns, but I felt as though they just guffawed at it ...The diarrhoea and vomiting had severely disrupted the electrolytes...in my blood, putting my heart under intense strain. My heart stopped and I had to be resuscitated.
	The doctors concluded that this was all due to an infection with a highly virulent strain of C.Diff.
	The ward I was on was closed as another 13 patients were affected by the bug".
	That is just one example among many of poor hygiene.
	I turn to an example of a lack of infection control, given by a 20-year old:
	"I was diagnosed with C.diff following a course of antibiotics that I took for an infected scar after a laparoscopy operation. I had a really dodgy tummy, then was admitted to hospital with life-threatening temperature, low blood pressure and high pulse. 24 hours later I was diagnosed with C.diff ... They got my temperature back up, and sent me home. Waiting at home for me was my Mum—she had just finished chemotherapy and was still susceptible to illness—so should they have sent me home? They kept me on a general ward"—
	not an isolated unit, a general ward—
	"whilst in hospital, and made no effort to stop the infection spreading to other patients."
	Here is an example of a lack of accurate information, which was posted on the website as recently as 10 January:
	"Brought my dad home from hospital yesterday ... Just looking through the copy of the discharge notes sent to the GP:
	'Mr. X has been well throughout his stay'.
	I can't believe there is no mention of catching C.diff, treatment given etc. The GP now has no idea that my dad has this bacterium."
	There are reports of patients being discharged from hospital before they are fit and ready to go home. This debate was also prompted by my experience over Christmas when visiting various residential homes. Sadly, I saw time and again residents who had recently been discharged from hospital who were malnourished and dehydrated; indeed, some were infected by the bug. Does the Minister therefore agree that all health care professionals, including those working in long-term care facilities, need to be made aware of the emergence of a stronger strain of C. difficile? Why are basic hygiene and the soap and water scrubbing that are so essential in tackling C. difficile not commonplace in hospitals?
	Dr. Stephen Fowlie, medical director of Nottingham University Hospitals NHS Trust, said the following of the recent outbreak at Nottingham City hospital:
	"Staff have to go back to the rather old-fashioned method of soap and water and that is a rather difficult message to get through".
	Why is this basic element of hygiene such a difficult message to get through?
	Have the Government taken heed of the recent outbreak at Nottingham's Queen's Medical Centre and joined in the good practice of setting up isolation wards away from short-stay surgical wards? Why, contrary to advice from the chief medical officer, is there inadequate control over the prescribing of high-risk broad-spectrum antibiotics to over-65s? Why do we not in this instance—perhaps uniquely—learn a lesson from Europe and industrially launder nurses' uniforms, instead of continuing with our unique British practice of laundering uniforms at home?
	Will the Government, who are so intent on a target culture—national targets, combined targets and now local targets—agree with the memo from their own Department, which said that this is basically a cop-out? Will the Minister condemn trusts that, according to the memo, simply see C. difficile as an unavoidable fact of hospital life? What will be done to tackle the lack of information for patients and relatives once patients are infected? What precautions are communicated to discharged patients when they go home, in order to stop C. difficile spreading in the community, as it can do? It is not just a hospital problem—it is out there in the community. Will the Minister therefore agree that C. difficile is indeed endemic and needs to be tackled as an urgent priority, rather than by simply trying to handle targets better?

Andy Burnham: I congratulate the hon. Member for Enfield, Southgate (Mr. Burrowes) on securing the debate. He began by saying that this is an important subject, and he is absolutely right. I also pay tribute to the constituents he mentioned for the work that they have done in setting up the website. It is important that people have sources of information to which they can turn to find out more. I pay tribute to his constituents for using their personal tragedy to help others who may be affected by the condition.
	I also welcome the opportunity to put on the public record some information about Clostridium difficile that will help to aid our understanding of it. While I appreciate much of what the hon. Gentleman said and I do not wish to inject a note of party political knockabout into the debate, it is important to understand that the vast majority of health service staff take these issues extremely seriously. They work to provide high standards of hygiene and a high quality of health care. They take concerns about C. difficile very seriously. That said, there is always more that can be done and I hope that in the course of this debate we can allude to some of those things and address this problem of concern to us all.
	Clostridium difficile infection is a hazardous complication of modern medical care. It usually affects vulnerable patients, particularly elderly patients with underlying illness for which they have been treated with antibiotics. Antibiotics are often life-saving, but a side effect of antibiotic treatment on the intestine can be to allow the C. difficile organism to grow and produce toxins that cause diarrhoea, which can be very severe.
	This is not a new disease. It was identified as a complication of antibiotic treatment in the late 1970s. A major outbreak in Manchester in 1991-92 caused questions to be raised in this House and publication in 1994 of national guidance that is still appropriate.
	We were the first country to introduce national surveillance. That was initially through the voluntary reporting system of the Public Health Laboratory Service, now the Health Protection Agency. That showed increasing numbers of cases during the 1990s and led the Department of Health steering group on health care-associated infections to recommend the introduction of mandatory surveillance. That was implemented in 2004 and all trusts in England are required to report their cases to the HPA. The surveillance is based on the most vulnerable group of patients, those over 65—who account for about three quarters of all cases.
	From the following year, as part of this surveillance, all microbiology laboratories were asked to send isolates of the C. difficile bacteria via the HPA regional laboratories to the anaerobe reference laboratory in Cardiff for typing to identify the changing patterns of types circulating in England.
	Clostridium difficile infection became prominent in the press and media, and of public and political concern, with several severe outbreaks in 2005 caused by a new type of C. difficile—type 027. The most prominent outbreak, as the hon. Gentleman mentioned, was at Stoke Mandeville hospital, and my right hon. Friend the Secretary of State for Health immediately asked the Healthcare Commission to investigate. Its report was published in July 2006 and made a number of recommendations, all of which were accepted by the Government and are being implemented in the NHS with support from the Department of Health.
	The hon. Gentleman raised questions about the Stoke Mandeville case and, indeed, the report made appalling reading. There can be no justification for some of the responses to the outbreak in that hospital, but that is not common across the system and I am confident that measures have been put in place since then to aid our understanding further and to reinforce the message that the safety of patients comes before anything else in the hospital environment. I am happy to place that message again on the record this evening for the avoidance of any doubt.

David Burrowes: I am grateful to the Minister for that assurance. In the executive summary on the national picture and lessons for other trusts, particular reference was made to the rapid isolation of patients with diarrhoea. That was not confined to those over 65, but was for patients in general. The experience reflected to the website and to me—and, I expect, to other hon. Members—is that that practice is not being followed by every trust or hospital. That provokes profound concern that lessons have not been learned.
	Another recommendation concerned communication with patients, staff and outside agencies. There is a concern whether there is proper communication between the health service and long-term care facilities, and with patients and relatives on discharge. I would be grateful for the Minister's comments on those points.

Andy Burnham: The hon. Gentleman will be aware that the Health Act 2006 introduced a new code of practice for cleanliness and hygiene. It requires acute trusts and PCTs to share information on infections when patients are transferred between health care settings. That should be the basic good practice to be followed by all the bodies involved, and he is right to raise the matter in this debate.
	The hon. Gentleman also asked about isolation facilities. Obviously, hospital trusts have to manage on their existing resources, but the Government have made capital available to the NHS in this financial year for the purpose of making modest improvements to the ward environment. Those improvements may include the provision of extra isolation facilities, where they are deemed necessary for the control of infection.

David Burrowes: Relatives of patients tell me that they are often not given adequate information, even though they are on the front line when it comes to providing care. In addition, as I mentioned earlier, patients' records often contain no reference to C. difficile.

Andy Burnham: The hon. Gentleman raises an important point. It should be standard clinical practice to pass such information on to anyone who may find it useful and be able to act on it. I and my colleagues in the Department will reflect on what he says, but I repeat that passing on information should be simple good practice, and that getting people to follow what is no more than common sense should not require a departmental diktat.

Andy Reed: My hon. Friend the Minister will recall that I said at Health questions last week that the  Loughborough Echo was running a campaign on this very issue. The campaign has also touched on the reporting of C. difficile on the death certificate when it has contributed to a person's death. Does the Department consider that such information should be included in death certificates? That does not happen in Leicestershire, although I know that it does elsewhere in the country. I am aware that he may not be able to answer this evening, but I should appreciate it if he would write to me. Inclusion of C. difficile as a contributory factor on a death certificate would not resolve the problem, but it would raise the infection's profile and provide some closure for families who are affected.

Andy Burnham: My hon. Friend raises an important point. I pay tribute to him for the work that he is doing on this matter, which I know that he raised in the House last week. Where C. difficile is known to have contributed to a person's death, that is indeed recorded, as it helps us to understand the extent of the problem caused by the infection. Over time, we can produce a pattern that will help us to understand the effects of the disease.
	The House may be interested in some figures regarding cases of C. difficile. As I said, mandatory reporting was introduced in 2004. In 2005, 51,690 cases were reported, an increase of 17.2 per cent. on the previous year. In many ways, the problem has been exposed by the mandatory reporting system that we have put in place. The Department has responded quickly to those figures and taken a series of measures that will help in bearing down on the problem. Moreover, although I accept that the hon. Member for Enfield, Southgate may be able to give examples of failings in respect of C. difficile, in the vast majority of cases, the quality of care provided by staff, and the importance that they place on the matter, cannot be faulted.
	I shall outline some of the actions the Government have taken. In response to the outbreak in 2005, a professional letter from the chief medical officer and the chief nursing officer was issued in December 2005 to all NHS trusts and foundation trusts in England. It reminded trusts of the surveillance requirements and of the key actions required for prevention and control of the C. difficile infection, and referred them to the existing 1994 guidance. The Department of Health has asked the Health Protection Agency to convene an expert group to review and update the guidance, and its draft recommendations are expected by April 2007. I hope that it will be some comfort to the hon. Member for Enfield, Southgate to learn that action is in hand to keep on top of the issue. Preliminary indications are that the basic elements of the existing guidance are sound.
	To strengthen clinical practice in C. difficile control, in May 2006 a seventh high impact intervention aimed specifically at C. difficile infection was added to the saving lives toolkit that had been launched in June 2005. That has been widely promoted throughout the NHS.
	Following the Healthcare Commission report and the publication of the surveillance data showing more than 50,000 cases reported from trusts in England in 2005, a further professional letter was issued in 2006 by the chief medical officer, the chief nursing officer, the chief pharmacist officer and the chief executive of the NHS, amplifying the policies and clinical practices that need to be implemented to control C. difficile. They included the following: first, the need for an antibiotic prescribing policy to control the use of broad spectrum antibiotics to prevent their overuse and to limit the length of time for which intravenous antibiotics are prescribed; secondly, ensuring that all trusts have prompt access to laboratory diagnosis of C. difficile infection seven days a week, so that tests can be done within 18 hours of the onset of symptoms or the admission of a symptomatic patient; thirdly, ensuring prompt isolation, segregation or cohort nursing of all patients diagnosed with the infection; and, fourthly, enhancing infection control procedures, with rigorous hand washing after each contact with a patient with a C. difficile infection. I think that picks up the point made by the hon. Member for Enfield, Southgate, but it cannot be emphasised too much that those basic procedures must be followed. Finally, there will be enhanced environmental cleaning and decontamination to remove the C. difficile spores that survive for a prolonged time in the environment after being shed by patients with diarrhoea.
	At the same time, trusts were told that the NHS operating framework for 2007-08 and the NHS contract would set out the requirements for primary care trusts to agree a local target with their acute hospital providers for a significant reduction in C. difficile infections. The scale of the target would be determined by the level of C. difficile infection currently in the trust. I urge my hon. Friend the Member for Loughborough (Mr. Reed) to talk to his PCT and his main acute trust to find out exactly how ambitiously they are setting that target. I welcome the intervention of his local newspaper in raising awareness of the issue; it should be locally driven, with locally set targets to bear down on the problems that he is experiencing in his area.
	Guidance is also embodied in the code of practice on hygiene and health care associated infection, which came into force under the Health Act 2006 in October last year. The code requires all NHS bodies to implement appropriate policies for prevention and control of the infection. Compliance with the code will be assessed by the Healthcare Commission as part of the annual health check, and I want to stress the fact that the commission will issue improvement notices under the Act when it finds trusts that are not complying with its requirements. We are encouraging the commission to consider that further measure when there is evidence of failure to comply with basic standards.
	To help trusts make the necessary physical improvements to the patient environment to help to prevent and control infection, the December 2006 professional letter announced the launch of a £50 million challenge fund to which all trusts could apply for capital funding to make the relatively small- scale improvements to their physical environment that will enhance their ability to control C. difficile and other health care-associated infections. I can update the House. There has been an encouraging response to the invitation to apply to that fund; a number of applications have been received and I believe that that will result in targeted, localised improvements in NHS trusts up and down the country to help trusts get a grip on the issues.
	To conclude, C. difficile infection is a serious problem in the NHS because of our success in treating a range of serious illnesses and in increasing the life expectancy of the population. That creates a greater number of patients more vulnerable to the infection. Nevertheless, the infection is also a result of insufficient attention to proper preventive measures. It requires rigorous implementation of hygiene and infection control measures and vigilance in the application of prudent antibiotic policies. All of that is included in the Government strategy for the control of health care-associated infections and will be enforced through the code of practice.
	I believe that we know what measures will, taken together, make a difference in this area. What we want to see is the issue gripped from the top of health care organisations to ensure that the necessary measures are implemented and that problems are kept under close scrutiny. More regular reporting of C. difficile data is required, so that we can keep a closer track of problems that trusts may be experiencing. Local Members should discuss these matters with their local trusts in their local areas, as that sort of combined approach will help us all to get a grip on the problem in every locality.
	I congratulate the hon. Gentleman again on securing this debate. I hope that it will contribute to improving public awareness of what he is right to identify as a very important topic.
	 Question put and agreed to.
	 Adjourned accordingly at twenty-nine minutes to Eleven o'clock.